Britain Exemption from financial services With the new global rules on taxing multinational corporations, there is a move to prevent the largest banks in the city of London from paying more taxes on profits in other countries.
The Paris-based OECD talks, which are due to end Thursday, have accepted a UK lawsuit that the financial services industry will be carved out. Proposed new global tax systemAccording to the two briefed on the negotiations.
But there is a price to pay for Britain’s Prime Minister Rishi Sunak’s victory over the details of the new corporate tax, these people said. He had to make concessions to the United States by dismantling the UK’s digital services tax, which focused on American tech companies.
The carve-out of financial services took place in the first part of global tax negotiations at OECD clubs in wealthy countries trying to define where the largest multinationals will have to pay taxes in the future.
The second part of the negotiations focuses on agreeing on a global minimum corporate tax rate of at least 15 percent to prevent companies from transferring profits to low tax jurisdictions.
Called the first pillar of the first part of the negotiations, the UK and France are more in countries where the largest companies, especially the US technology group, do business but not always where they are. We are asking you to guarantee that you will pay the tax.
The United States has agreed to focus on taxing multinational corporations as long as other countries have promised to eliminate digital taxes, but will apply the first tax law to all sectors, including financial services. It shocked Britain by saying it needed to be done.
“This was a pure game between the United States, Britain and France,” said one close to the negotiations.
The UK believed that financial services would be cut out of the new global tax law. Regulations require banks to be individually capitalized in all jurisdictions in which they do business, to declare profits and pay taxes in the country in which they do business.
Without the exemption, HM Treasury risked reducing taxes paid to city banks and increasing taxes paid to other countries.
A person who was briefed on the OECD talks said the United States wanted to ensure that Britain was more specific about the early elimination of digital service taxes, but the timing of the elimination was “carefully choreographed.”
Recommendation
The United States initially wanted the United Kingdom, France, Italy and other countries with digital taxes to abolish them the moment new global tax laws were agreed, but this was in strong opposition from London and Paris. I faced it.
“It’s a bit like giving a car key before you get the cash,” said one of the snack allies.
However, UK officials say that countries with digital taxes need a staggered process to take steps to get rid of them and at the same time move the United States to implement a new global tax system. I recognized it.
The snack ally said: They will, but everything must be seen in the round. “
Financial services sector set for carve-out from new global tax rules Source link Financial services sector set for carve-out from new global tax rules