Sunak seeks opt-out for City of London from G7 tax plan

Britain is one of a number of countries asking for ‘an exemption on financial services’

Chancellor Rishi Sunak is pushing for exemption for the City of London in the G7’s move for a new global tax system targeted at the world’s largest multinational enterprises.

Sunak previously stated that the recent agreement was “historic” however it would force the biggest tech companies to “pay their fair share of tax in the UK”.

However, the Financial Times reported that Britain is one of a number of countries seeking “an exemption on financial services”, as the chancellor is fearful that multinational banks headquartered in London could be impacted.

HSBC makes over 50% of its revenue from China, while Standard chartered, also based in the UK, focuses mostly on Africa and Asia, and conducts little activity in the UK.

Sunak’s move comes as a think tank warned that major US tech firms would pay less UK tax under the G7 arrangement than they do with the status quo.

Tax Watch suggested that the final payment could come in at 50% of what is normally paid and that, based on 2019 numbers, Amazon, eBay, Google and Facebook could save £232.5m per year.

The research added that Google pays around £219m to the digital services tax, although it would pay only £60m to the UK’s exchequer under the current plan.

Similarly for Facebook, its tax take would fall by £30m to £28m. While Amazon would see a £40m fall and eBay a decline of £15.2m taxes paid.

While the companies would end up paying more tax in total, the US Treasury would benefit the most.

The deal will see a global minimum tax of 15% on the biggest companies in the world.

Its aim, as US treasury secretary Janet Yellen puts it, is to end “30-year race to the bottom on corporate tax rates”.

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