THE UK Chancellor wants the City of London to be exempt from the G7 tax agreement reached with G7 finance leaders just days ago, it has emerged.
Rishi Sunak wants a deal specifically for financial services amid fears that banks with London head offices would be impacted by the change, the Financial Times reported.
Speaking at the weekend, Sunak said the “historic agreement” would lead to the biggest multinational tech companies having to pay their fair share of tax in the UK.
However an official close to the talks said the UK is now among the countries seeking an exemption for financial services.
READ MORE: G7 finance ministers reach global corporation tax agreement
The deal agreed between the finance ministers means nations can tax 20% of the biggest multinationals’ profits above a 10% margin based on where the company made its sales.
US president Joe Biden’s proposals for the system were cross-sector – based on the biggest, most profitable firms.
A British official says Sunak raised the issue at the G7 talks and will continue to make the case for a financial services exemption at the G20 meeting next month.
“Our position is we want financial services companies to be exempt and EU countries are in the same position,” they said.
At the G7 meeting last week, the finance ministers in attendance agreed multinational companies would have to pay a minimum tax rate of at least 15% in every country where they operate.
READ MORE: Richard Murphy: Rishi Sunak, austerity and the threat to Scotland
Biden (above) has pushed for a minimum rate of 21% but was persuaded to lower this to 15% to appease the other countries present.
Critics say the leaders have failed to come to an arrangement that would prevent tax havens undermining nations with higher tax rates.
The Institute for Public Policy Research (IPPR) think tank said while the 15% rate would raise £7.9 billion for the UK, 21% would generate £14.7bn.
The centre’s head of economic justice, George Dibb, said: “With the UK corporation tax rate set to rise in 2023, the Government should be demonstrating leadership and aiming for a global minimum rate of 21% or higher with the ultimate goal of around 25%.”
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