Source · Select Committees · Public Accounts Committee
Recommendation 4
4
Accepted
HM Treasury and HMRC have a vital role in ensuring that the multilateral assurance framework...
Recommendation
HM Treasury and HMRC have a vital role in ensuring that the multilateral assurance framework for Pillar One of the OECD reforms will meet Parliament’s desire for accountability and transparency. The 140 jurisdictions involved in the development and implementation of the reforms will have very differing cultures around the transparency with which tax systems operate and the approach to tax compliance activity, and differing levels of commitment to the reforms. The OECD reforms will be administered and enforced through a multilateral administrative framework which will change tax administration for multinational businesses and determine the approach to compliance actions. Success will depend on cooperation between countries hosting users and those hosting the businesses. HM Treasury and HMRC have a vital role in ensuring that the framework meets their objectives and the expectations of Parliament around accountability and transparency, and that these are reflected in the international agreement and the compliance regime. Recommendation 4: HM Treasury and HMRC should: • alongside the Treasury Minute response to this report, write to the Committee setting out their objectives for the development of the multilateral administrative framework, including audit arrangements, • ensure they propose assurance arrangements that will provide the UK Parliament with sufficient accountability and transparency to provide assurance that the Pillar One and Pillar Two reforms are operating effectively, and • set out robust forecasts of expected revenues when details of the new regime are agreed.
Government Response Summary
The government agrees and will write to the committee with the UK's objectives for the multilateral administrative framework, including audit arrangements and states that the forecasted revenues for Amount A will be published in the usual way after OBR scrutiny, at a future fiscal event.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Target implementation date: June 2023 4.2 Unlike Pillar One, which is underpinned by a multilateral convention, Pillar Two must be implemented unilaterally in line with OECD Model Rules but with some multilateral aspects such as a standard template information return which can be exchanged between jurisdictions. The government has introduced legislation in Finance (No. 2) Bill 2022-23 to implement Pillar Two rules. 4.3 The wider objectives for the development of the multilateral administrative framework for Amount A of Pillar One are set out in OECD publication of 6 October 2022.We will write to the committee with UK’s objectives for the multilateral administrative frame working, including audit arrangements. 4.4 The government agrees with the Committee’s recommendation. Recommendation implemented 4.5 Once implemented, Amount A will operate within the corporation tax regime and be subject to normal Parliamentary scrutiny. The government has introduced legislation to implement Pillar Two rules, which will be subject to the normal review processes and Parliamentary scrutiny. 4.6 After 7 years of the Multilateral Convention coming into force, a review will be conducted into the implementation of Amount A. If viewed as successful by the parties to the convention, the turnover threshold would be reduced from €20 billion to €10 billion. The UK would, as a party to the convention, be a part of that review into whether the reforms have been implemented successfully and are operating effectively. 4.7 The forecasted revenues for Amount A will be published in the usual way in a Tax Information and Impact Note after OBR scrutiny, at a future fiscal event. 4.8 The expected revenues that Pillar Two will raise were published in the Tax Information and Impact Note at Budget on 15 March 2023.