Sunak pushes for City exemption from new global tax regime

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UK Chancellor Rishi Sunak is trying to get the City of London a waiver for the new global corporation tax system only agreed at the weekend.

G7 finance ministers agreed to a minimum global corporate tax rate of at least 15% to generate more tax from multinationals and tech giants.  

The deal was agreed ahead of a summit of G7 leaders that gets underway in Cornwall today and marked by Joe Biden in his first visit to the UK as US President.

Reuters reported that the Organisation for Economic Co-operation and Development, which has been the prime mover behind the global tax regime, had suggested last year that financial services firms be excluded.

A spokesperson for the City said financial firms already contributed more than 10% of total government receipts from all taxes and the agreement being negotiated at the OECD aims for the system to be fair.

A new report, meanwhile, suggests the tax changes might see the UK receive even less from the tech giants than currently.

Lobby group Tax Watch calculates the Treasury might lose £230mln a year from the changes as receipts will be less than under the current digital services tax.

Levies at 2% on revenues of search engines, social media services and online marketplaces, the digital services tax generated around £330mon last year but this might fall to £100mln under the new proposals according to the study.

Tax Watch estimates that Google (NASDAQ:GOOG) paid £219mln through the digital services tax, but this would drop to £60mln under the G7 plan.

For Facebook, tax receipts would drop from £58mln to £28mln.  Amazon’s bill would drop from £50mln to £10mln and eBay’s from £19mln to £3.8mln.

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