(except clauses 4, 5, 20, 28, 57 to 77, 86, 111 and 282 to 289, and schedules 1, 3, 11, 12, 21 and 37 to 39) - Clause 30 - Provision not at arm's length: transations between UK taxpayers
Finance Bill
2:30 pm
Ms Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
I welcome you to the chair for our deliberations this afternoon, Sir John. It is a pleasure to see you, and I will be extremely careful, as always, because you will be paying close attention to the many areas of discussion on which you are very knowledgeable.
Before we broke from this morning's sitting, we were considering clause 30 on transfer pricing. I have dealt with the specifics in the questions from the hon. Member for Hertford and Stortford (Mr. Prisk), and in my closing remarks I wish to clarify the purpose of the clause.
This morning we discussed issues around transfer pricing. The rules are vital to ensure that businesses, especially multinationals, are taxed fairly in respect of their activities in the United Kingdom. Until now, taxes have applied only to cross-border transactions. Doubt had been thrown on their effectiveness because of decisions made in the European Court of Justice on the tax rules of other countries. Clauses 30 to 37 address the uncertainties that business has identified.
I also made it clear this morning that, although the Government are responding to those uncertainties, we will defend any challenges to existing UK legislation. I am perfectly at ease with the proposal, and I explained to the Committee that we are content. My officials advise me that the proposals cause no further uncertainty; rather they provide the structure that the companies concerned wish to see.