Rishi Sunak does not back Joe Biden’s global business tax plan
Rishi Sunak is withholding support for Joe Biden’s draft plan to implement a minimum 21 per cent global business tax rate, with the chancellor wanting more assurances on taxation on US tech giants.
Sunak, who is chairing this year’s G7 meetings for finance ministers, has reportedly said he would only support a minimum tax rate if it came with a broader range of reforms that force large US tech companies pay more tax overseas.
International agreement is needed on any new comprehensive online tax as the Organisation for Economic Co-operation and Development (OECD) oversees treaties on how profits of multinationals are taxed.
The Treasury unilaterally implemented its own digital services tax last year on online marketplaces, like Amazon and Asos, for the business they do in the UK, however the chancellor has said it is only a stopgap until when a global tech tax can be agreed.
Labour shadow foreign secretary Lisa Nandy has said the UK should accept the US’ plan for a 21 per cent floor on business tax.
However, the Financial Times reports that the Treasury thinks this will play into the hands of Washington and let US tech giants like Amazon and Facebook continue to not pay much tax to overseas countries.
Sunak said in March that he was “very keen to see a resolution” on the issue, with the chancellor making it one of his top three priorities in G7 meetings this year that are hosted by the UK.
Speaking at a Wall Street Journal event last week, the chancellor said: “It’s about finding a way of appropriately and fairly taxing large international digital companies.”
The chancellor also said the 21 per cent floor for business tax was “higher than where previous discussions were”, but that he was open to discussions.
The UK will lift corporation tax to 25 per cent in 2023 for the country’s most profitable businesses.