Cyprus Mail 1 July 2021 - by Andrew Rosenbaum
 |
| UK Chancellor of the Exchequer Rishi Sunak |
Britain is set to secure an exemption for financial services from a new global tax system which was agreed by the Group of Seven economies to squeeze more money out of multinationals like Google, the Financial Times reported late on Wednesday.
The carve-out for financial services came in the first part of the global tax negotiations at the OECD club of rich nations, which are seeking to define where the largest multinationals have to pay tax in the future.
The UK maintained that financial services should be carved out from the new global tax rules because regulation forces banks to be separately capitalised in every jurisdiction they operate in, so that they declare profits and pay tax in the countries in which they do business.
Without the exemption, the UK Treasury risked seeing City banks paying less tax to it and more to other countries.
The talks at the Paris-based OECD, which are due to conclude on Thursday, have accepted Britain’s case that the financial services industry be carved out of the proposed new global tax system, according to two people briefed on the negotiations. But UK chancellor Rishi Sunak’s victory in haggling over the details of new corporate levies came at a cost, said these people. He had to make concessions to the US on dismantling Britain’s digital services tax that is focused on American technology companies, the report said.
Reuters had reported earlier this month that British finance minister Rishi Sunak was pushing for financial service firms to be exempt to help protect the City of London’s largest banks from paying more tax. read more
The new global tax rules are designed to make companies pay more tax in countries where they operate. Banks do typically pay taxes locally on profits made in different jurisdictions, the OECD said in a paper in 2020.
