Commentary

B4.192 Transfer pricing and diverted profits tax

Business tax
Business tax | Commentary

B4.192 Transfer pricing and diverted profits tax

Business tax | Commentary

B4.192 Transfer pricing and diverted profits tax

The introduction of the diverted profits tax (DPT) arose because HMRC believed that some multinational enterprises were not correctly operating cross border pricing arrangements which met with the OECD transfer pricing guidelines1. This could result in the diversion of UK profits to an overseas entity with lower tax rates and so the DPT was implemented at a higher rate than UK corporation tax to encourage appropriate transfer pricing to be put in place by multinational enterprises. Further details of the DPT can be found in D2.702.

Following enquiries into profit diversions which found businesses

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