Rishi Sunak “is pushing for the City of London to be excluded from new global tax cuts,” despite leading efforts by the G7 to get big corporations to pay more
- G7 finance ministers agreed on a plan to introduce global tax changes last weekend
- Plan designed to get big corporations to pay their fair share of taxes where they operate
- But Rishi Sunak is said to be seeking a spin-off from the plan for the City of London
Rishi Sunak wants the City of London to be excluded from a global G7 tax fight, it said today.
The Chancellor is said to be pressing for a spin-off of the banks in the capital’s financial district, as there are fears that new proposals could hit the financial coffers hard.
The G7 finance ministers agreed last weekend on a two-part plan targeting large corporations, including online tech giants, with the first part setting a corporate tax base of “at least 15 percent”.
The second part ensures that large companies, especially those with a strong online presence, pay taxes in the countries in which they operate, not just where they are headquartered.
A British official told the Financial Times that the Chancellor wanted a “financial services exemption” in the second part of the plan on the grounds that banks already pay local taxes in the countries in which they operate.
Rishi Sunak wants the City of London to be excluded from a global G7 tax fight, it said today
The Chancellor is said to be pressing for a spin-off of the banks in the capital’s financial district, as there are fears that new proposals could hit the financial coffers hard
There are fears that the UK could wrongly lose tax revenue if UK based banks with large overseas operations are included in the plan.
Mr Sunak allegedly raised the issue at the G7 finance ministers meeting, with a UK official telling the FT, “Our position is that we want financial services companies excluded and EU countries are in the same position.”
However, the Chancellor is likely to encounter resistance to the US demand.
The White House insists that the plan should, by and large, apply, amid concerns in Washington that the changes may unfairly target US tech giants.
The G7 tax plan was agreed after two days of talks in London and after years of discussion and was celebrated by Mr. Sunak as a “historic” moment.
He said the changes would “make the global tax system fair so that the right companies pay the right taxes in the right places”.
The British corporate tax rate is to be increased from 19 to 25 percent by 2023, as the Chancellor announced in the budget in March.
A Treasury spokeswoman explained the agreed tax reforms: “Under the first pillar of this historic deal, the largest and most profitable multinationals will have to pay taxes in the countries in which they operate, not just where they are headquartered.
“The rules would apply to global companies with a profit margin of at least 10 percent – and 20 percent of any profit above the 10 percent profit margin would be redistributed and then taxed in the countries in which they operate.
“The fairer system will mean that the UK will collect more tax revenue from large multinationals and help pay for public services here in the UK.”