Clause 71 - Review of DST

Part of Finance Bill – in the House of Commons at 4:15 pm on 1st July 2020.

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Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury 4:15 pm, 1st July 2020

The answer is that what I am talking about is a voluntary disclosure by those companies. I am not aware of a separate EU requirement for them to do so. Certainly, it is the voluntary disclosure that is the thrust of what I am talking about. Many other companies have the capacity to make voluntary declarations, and I am indicating in response to my right hon. Friend the Member for Sutton Coldfield my support for more of those companies doing that. I am only doing that, however, as a preliminary to coming to his point about mandation. We have taken the view that for the time being this approach should remain voluntary and that further legislation will not be needed until and unless we can get public country-by-country reporting agreed on a multilateral basis.

There is a specific set of reasons for that. First, we want—I am sure my right hon. Friend feels the same way—the measure to be effective in meeting the objective of improving tax transparency. A measure that had the effect of reducing tax transparency would be counterproductive. The worry is that only multilateral implementation will give the comprehensive information required on both UK-headquartered and foreign-headquartered multinationals required to deliver that. A unilateral approach risks being self-defeating and resulting in the publication of incomplete and potentially misleading information about the activities of multinationals. It might also allow requirements to be avoided through group restructuring. We do not want to promote firms undertaking group restructuring in order to avoid disclosure and increased transparency requirements. Adopting public country-by-country reporting unilaterally carries that risk and could result in groups moving their headquarters out of the UK to locations without a requirement to publish.