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Rishi Sunak refused to support Joe Biden’s plan to set a minimum global business tax rate of 21% because the United Kingdom urged the United States to ensure that any agreement includes a fairer system for taxing digital technology giants.
The prime minister, who is the chairman of the finance ministers of the Group of Seven countries, said that he will only consider the global minimum tax as part of a broader package. Treasury officials are worried that Biden intends to force technology companies to pay “tax Pay taxes in California”. United Kingdom”.
Sonak is pressured by the Labor Party for recognition The United States plans to increase this ratio to 21% The lowest corporate tax rate in the world. Lisa Nandy, the shadow secretary of foreign affairs, accused Britain of hesitation, not leadership.
But the prime minister’s allies argue that the plan to support Biden will fall into the hands of Washington, who hopes to reach an agreement on the lowest global tax rate as soon as possible, especially because the US president is also seeking Increase domestic corporate tax rate Reach 25% to 28%.
British officials worry that the U.S. will be unwilling to accept a sufficiently aggressive attitude Adjust global tax rules The company’s history can be traced back to the 1920s to reflect where multinational companies sell, rather than these companies having a local presence.
The UK is also worried that even if the Biden government approves a global agreement, it may still Congress faltering, So that the United Kingdom is in a high dry state.
The OECD and the Group of Twenty (G20) are discussing global tax reforms. When the finance ministers of the Group of Seven countries meet in London on June 4, this question will definitely arise.
Mike Williams, Director of Commerce and International Taxation of the Ministry of Finance, said in a speech at the Oxford University Business Taxation Center’s online conference that, politically, it is unacceptable to consider only transactions with the lowest taxes in the world.
He said: “The core proposition of the UK is that we must solve the digital taxation problem that we have been working on for many years.”
Britain introduced Own digital sales taxIt is estimated that by 2024-5, this will raise about 500 million pounds from large American technology companies every year.
Williams said: “This is not primarily a question of minimum tax rates.” “Minimum tax rates may help-as long as they work-to ensure that companies pay taxes, but they are equally important where they are paid.”
He added: “In terms of providing schools for children in Coventry, if you pay more taxes in California but the taxes you should pay in the UK, it’s actually not very helpful.”
But the UK is ready to reach a covering The two pillars of Biden’s plan Comprehensive reform of global taxation: global digital taxation and the lowest global tax rate for multinational companies.
The Prime Minister said at the Wall Street Journal CEO Summit last week that digital tax is the UK’s top priority: “It’s about finding an appropriate and fair way to tax large international digital companies.” He has promised if it is reached. A cross-border agreement will eliminate the UK’s digital sales tax.
Shannack also stated that the minimum corporate tax rate is 21%, which is “higher than previously discussed”, but he is willing to discuss it.Ireland is strongly opposed with a total tax rate of 12.5%; Sunak set Increase the UK tax rate Reach 25% by 2023.
Nadi said that the Biden initiative on the world’s lowest tax rate represents a historic opportunity. She is working with shadow minister Rachel Reeves to push Sunnak to put this issue on the agenda of the G7 summit in Cornwall next month. She said: “We must avoid falling into a trough.”
Robert Palmer, the head of the movement organization Tax Justice UK, called on Britain to support Biden’s plan, saying that the current position “doesn’t look good for a government willing to do so. “. Solve the problem of tax avoidance.
He said that although the transactions on the table are “not perfect”, the lowest global corporate tax rate of 21% will become a “rule of the game” preventing companies from paying “ultra-low” tax rates.
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