Tax Avoidance: Base Erosion and Profit Shifting

Lord Leigh of Hurley Excerpts

Monday 2nd November 2020 Lords Chamber

[Baroness Penn (Con)]

My Lords, I can make that commitment. By their very nature, these proposals will benefit low-income countries by expanding their tax rights and reducing the incentive to shift profits away from such jurisdictions. As I outlined in my previous answer, the Government are also committed to putting resources behind capacity building to ensure that low-income countries can also benefit from these measures.

[Lord Leigh of Hurley (Con)]

My Lords, I welcome this extremely important Question. We have discussed pillar 1 before in this Chamber. My noble friend is aware of my views that the digital services tax is not working. The pillar 2 blueprint was published a few weeks ago. Although it is complex, it has four concrete proposals to ensure that international companies pay the minimum level of tax. One of these, the subject to tax rule, looks the most effective, as it encourages withholding tax. Can the Minister assure the House that the Government will support this?

[Baroness Penn (Con)]

My Lords, I assure my noble friend that pillar 1 remains the UK’s number one focus, partly so that we can achieve a multilateral agreement to replace the digital services tax, which was intended to be only temporary. We also recognise that a global solution will need to include outputs on pillar 2. We are working to ensure that these proposals, including the one referred to by my noble friend, are balanced and appropriately targeted, and have the support of all those involved in the negotiations.