As of April 2015, the UK introduced a new budgetary measure targeting companies that have operations in the UK, but diverting the profits offshore. The new law stipulates that these companies will have to pay a Diverted Profits Tax (DPT) of 25%. It is expected that the tax will contribute another £25 million to the UK treasury this year and over £3 billion over the next 5 years. The aim of the law is also to discourage the behaviour of companies to divert profits out of the UK to offshore accounts.
The tax has been introduced after larger companies, such as Google, Amazon, Apple and Starbucks have been under investigation and heavy criticism for not paying enough taxes. For example, since it has started trading in the UK in 1998, Starbucks paid a total of only £8.56 million in corporation tax, and between 2009 and 2012 they did not pay any corporation tax at all. The company claimed they only incurred losses during that time, despite sales of over 400 million in 2011 alone.
The new tax measure targets companies operating in the UK and generating over £10 million annual turnover. The companies will have to declare this to HMRC (HM Revenue & Customs) who will assess if the company structure implies that the profits are diverted offshore, and if the company is therefore liable to pay the DPT.
The European Commission is also investigating corporation tax arrangements of EU member states, as it came to light that several states offered a favourable tax rate to larger companies, and enabled them to pay very little or almost no tax.
Malta is a low tax country as well, and many companies move their company operations to the islands in order to save corporation tax. However, there is no favourable treatment to large corporations, and the same rules apply to every company. The taxation structure is perfectly in line with EU regulations. You can find more information about the Malta company model on our website.
