UK to seek exemption for finance firms in London from G7 tax plan

CHANCELLOR Rishi Sunak will seek exemption for financial services firms in London from a new global tax system, agreed last week by the G7 member nations.

Proposed by US president Joe Biden, the new tax plan aims to "redistribute" the profits of the world’s 100 largest businesses, such as Google, Amazon and Facebook.

Sunak is concerned the new system could prove to be a significant deterrent to banks in London, compounding the impact of Brexit that resulted in a shift of financial trading to Amsterdam, The Guardian reported.

It is unclear whether all forms of financial services – from banks to investment funds, insurers and hedge funds – would be excluded in a process still to be negotiated.

“There is an assumption by a number of countries that there would be an exception for financial services. The question is now how you manage these exceptions without all the complexities they bring,” Chris Sanger, the global government and risk tax leader at the accountancy firm EY, said.

Sunak praised the tax agreement when G7 finance ministers agreed the framework last Saturday (5), adding that it would force “the largest multinational tech giants to pay their fair share of tax in the UK”.

The gaps in the deal will be discussed at length between the broader G20 group of countries – including China, India and Brazil – at meetings in Venice next month, the newspaper said.

The changes will then be negotiated between 139 countries in a process overseen by the Organisation for Economic Cooperation and Development, (OECD) with the aim of reaching a final agreement by October.

A spokesman for UK Finance, said “We believe the taxation system should seek to ensure the UK remains an attractive place to do business, is globally competitive and enables the UK banking and finance sector to support the economic recovery.”