Multinational companies avoided paying the UK government £5.8bn in corporation tax last year by keeping their accounts in countries with low-tax regimes.
The figure is a 51% rise on the previous year’s figure of £3.8bn, according to figures released by law firm Pinsent Masons under a Freedom of Information Act request.
The news follows the launch of the so-called ‘Google tax’ by former Chancellor George Osborne to crack down on US tech giants trying to shift corporate profits to low-tax countries.
Diverted Profits Tax
The new Diverted Profits Tax raised £281m in 2016-17, nine times more than the previous year, but the government hopes to raise the take to £2bn.
The practice of moving corporate profits around – known as transfer pricing – now represents nearly a quarter (23%) of the total suspected amount of underpaid tax by large businesses last year, according to Pinsent Masons. The estimated figure of £25bn is up 17% on last year (£21.8bn).