Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, what his policy is on the Base Erosion and Profit Sharing process; and if he will make a statement.

The UK is at the forefront of multilateral action through the G20 and OECD to tackle the issue of tax avoidance by multinational enterprise. The UK used its Presidency of the G8 to successfully build international support for this work.

Work is well underway at the OECD, in the form of the Base Erosion and Profit Shifting (BEPS) project. The first phase of the BEPS project is now complete, with participants reaching agreement on seven reports which have been produced by the OECD and endorsed by G20 Finance Ministers at their Summit in Cairns 20-21 September.

Of these outputs, this government has already taken domestic action towards implementation. In September 2014 the UK announced it would be the first of 44 countries to formally commit to implementing the newly agreed BEPS output of a country-by-country reporting template.

Subsequently, in October 2014 the UK announced its commitment to publish a consultation on the BEPs project’s 2014 output to neutralise hybrid mismatches - a tax avoidance technique used by multinationals to exploit differences between countries’ tax rules to avoid paying tax in either country, or to obtain more tax relief against profits than they are entitled to.

The BEPS project is due to finish by December 2015. In order to achieve success by creating effective recommendations for the remaining Actions, in line with the Action Plan, the collaboration and momentum of the process must continue.

As set out in the publication at Budget 14, one of the key principles underpinning the UK’s approach to the BEPS project is that the solutions should be consistent with the Government’s wish to promote UK growth and competitiveness.

Whilst the project will not be completed until the end of 2015, if we can achieve our goals, we will succeed in fundamentally changing the international tax landscape, and shift the balance of the rules in favour of tax authorities, enabling us to clamp down on those who refuse to play by the rules.