Commenting on the news that UK government ministers have approved an amendment to the Finance Bill which paves the way for the public disclosure of country-by-country tax reporting, Rebecca Reading, International Tax Partner at RSM said:
‘This is a significant victory for campaigners and positions the UK as a leading proponent of tax transparency within the international community. However, this decision by ministers is not without risk.
'As over 100 countries around the world seek to implement the OECD's plans to introduce greater coherence in the global tax system and prevent tax avoidance by multinationals, countries that go further than what has been agreed by the OECD risk alienating others and putting their future cooperation in doubt. This risk is particularly acute with regards to the US.
'Just yesterday at the G20 summit, President Obama said that progress on international tax reform needed to be done 'in concert' and warned against unilateral action. Yet by choosing to support the public disclosure of country-by-country tax reporting - albeit in principle and at an appropriate time - that is exactly what the UK is doing.
'There is a real danger here that the UK's action could derail progress on BEPS implementation at a time when it is beginning to get some good traction across the globe.
'In a sense, the timing of this decision could not be worse, coming as it does at a time of political tension between the EU and the US over tax policy, following the Commission's decision on Apple's tax affairs.
'Many commentators are unhappy that the OECD's reforms don't go far enough. However, the reality is that it's the only show in town.'