While British Chancellor Sage Craze would chair the G7 Finance Committee in early June, he refused to support the US President’s proposal on the global minimum taxation of multinationals.
At this time, the UK Finance Minister, Sage Craze, does not want to hear about the 21% global minimum tax. This option, Pillar 2 of the OECD-initiated reform, was put forward as part of the reform of corporate taxation, and has been proposed by the US President for 135 countries. It should belong to the hundred largest digital companies, whose Big mistake. US administration plans find favorable resonance in some countries of the G7, such as France or Germany.
While the British Chancellor will be master of ceremonies for G7 finance at the beginning of June, tensions are rising within his cabinet at 11 Downing Street. A Treasury spokesman said, “The UK has actively lobbied for international solutions to the financial challenges posed by the digitization of the economy.” And the Chancellor has made it a major priority for Britain’s G7 Presidency. “
California. This resistance is thus incomprehensible and leads the opposition government to adopt the US President’s resolution. To defend its position, the Treasury presents several arguments, including the question of the imposition of this tax, while the United States wants American companies to pay their taxes wherever the money has been earned. “We welcome the new commitment of the US administration to find solutions to these challenges through the OECD,” the spokesperson said. But it is also necessary that any deal involves changes to ensure that digital businesses in the UK pay taxes that reflect their economic activities. “
Mike Williams, Treasury’s director of international affairs and taxation, is particularly concerned that the tax arising from activities on British soil ends up in California’s pocket and not in His Majesty’s stockings. “We don’t even know if Congress will vote for this 21% rate,” he said. There are also countries whose rates are very low, but we need to reach as broad a compromise as possible ”.
Mike Williams also recalls that the United Kingdom has always been in favor of Pillar 1 of this reform, which, according to the OECD, “aims to ensure that multinationals that undertake significant and sustainable activities in courts where their The pass is not necessary. A physical presence is to be enforced in those jurisdictions. However, for some opponents of this view, this option may allow tax havens to block the new tax system.
For Alex Justice Cobham, CEO of Tax Justice Network, the UK sees this pillar as having the ability to tax American tech companies. “That line is very clear, to be honest,” he commented on Twitter. It responds to pressure from the British public, which sees fair taxation of multinationals (especially technology) as a top priority. And at the same time, it gives the UK cover to block any real progress. “
Austerity. Robert Palmers, executive director of the Tax Justice Organization, also underlines the incongruous line of chancellors. “The Sage Craze publicly stated that large companies were supposed to pay their shares, but they are holding off an offer that allows them to do exactly that, because it is in column 2 that there is money,” he explains . And at the same time, the Chancellor plans to raise UK corporate tax by 25% [cette hausse ne concernera que les entreprises qui génèrent le plus de profit, soit 10 % des entreprises, à partir d’avril 2023, contre 19 % aujourd’hui]. We wonder what his motivations are. “
For Christiana Panayi, a tax law professor at Queen Mary University in London, conservatives want to fulfill their 2019 campaign promises and the end of austerity. “Even if Kovid has been there, the government has its own agenda to keep,” she underlines. Thus this increase should increase British tax revenue while reducing borrowing, but without affecting public spending.
Also, the country needs to define its new post-Brexit role with international companies. And in order to do so, it still intends to maintain a competitive tax regime which, according to the government, is important to maintain the growth and attractiveness of the country as a place of business. The government continues to reiterate that even when the corporate tax falls to 25 per cent, Britain will remain more competitive than other G7 countries in the region. Finally, the Treasury does not say that it is against the principle of minimum taxation, but it does a piracy by asking for details of a more global package and measure. And meanwhile, he is blocking.