The UK government recently published its draft legislation on the new diverted profits tax (“DPT”). The tax, which will take effect on April 1, 2015, is designed to counteract arrangements that would otherwise erode the UK tax base and to encourage groups to ensure that profits are taxed where the related substance is located.
Although the DPT has been referred to in the media as the “Google Tax”, its scope is not limited to technology companies. In fact, the DPT can potentially apply (at a rate of 25%) to a broad range of companies and fact patterns. For a more detailed discussion, see James Wilson’s The UK Diverted Profits Tax - A Summary, (December 2014).