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By Ben Stupples
U.K. multinational companies have started to file their first global tax reports in a move that will provide governments with unprecedented details on the businesses’ financial data.
A U.K. tax authority spokesman told Bloomberg Tax Dec. 12 that companies have “successfully” begun filing their reports ahead of the first deadline at the end of 2017.
Known as country-by-country reporting, the filings are the most widely adopted policy from the OECD’s project to curb tax avoidance among multinationals. The measure provides a clear picture of companies’ finances, such as profits and taxes paid, for each country in which they operate.
Companies’ submissions of their country-by-country reports to Her Majesty’s Revenue and Customs come after the U.K. tax authority created a system to receive the filings. The online service was supposed to be available by the end of the summer, but in its latest statement, HMRC said the service had only launched in “the middle of November.”
Under the Organization for Economic Cooperation and Development’s guidance, companies should file their reports within 12 months of the relevant fiscal year. In line with the U.K.’s Finance Act 2015, any company with a calendar year-end for its accounts must file by Dec. 31, 2017.
More than half of companies listed on the U.K.’s FTSE 100 stock market index have calendar year-ends, according to data compiled by Bloomberg Tax. In total, around 300 U.K. multinationals will have to file country-by-country reports to HMRC, according to an official policy paper.
Country-by-country reporting only applies to companies with annual group revenue of at least 750 million euros ($890.9 million).
HMRC’s delay in launching the portal has frustrated U.K. tax practitioners.
We “got the notice it is now finally open,” Wendy Nicholls, a tax partner at the global accounting firm Grant Thornton LLP, told Bloomberg Tax in a Dec. 13 email. She and her colleagues are currently reviewing companies’ reports and putting the files in the required format.
HMRC’s delay also comes after other countries have pushed back the deadline for country-by-country reports. In the past month, Australia, Belgium and Ireland have all postponed theirs, for reasons varying from technological glitches to the start of Christmas holidays.
Malcolm Joy, meanwhile, a London-based international tax partner at global accountancy firm BDO UK LLP, said the filing system has often crashed since its launch when companies have used it.
“Our general view is that the system’s been problematic,” he told Bloomberg Tax Dec. 13.
Once a U.K. multinational files its country-by-country report to HMRC, the tax authority will share it with their counterparts in every jurisdiction where the business operates.
In the reports, the company will disclose private information that includes their revenue, employee numbers, taxes paid, and tangible assets for each jurisdiction.
In the Dec. 12 statement, HMRC said it has contacted the businesses that “needed access” to its portal to file their first reports this year. While the service is live, it’s still in a “testing phase” and is hosted privately on HMRC’s system instead of on the public government website, the spokesman added.
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