Rishi Sunak 'wants City of London to be excluded from G7 tax plan' (2024)

Rishi Sunak wants the City of London to be excluded from a global G7 tax crackdown, it was claimed today.

The Chancellor is said to be pushing for a carve-out for banks based in the capital's financial district amid fears new proposals could hit Treasury coffers hard.

G7 finance ministers agreed to a two-part plan last weekend aimed at targeting large firms including online tech giants, with the first-part setting a corporation tax base level of 'at least 15 per cent'.

The second-part willensure major firms, especially those with a strong online presence, will pay taxes in the countries where they operate and not just where they have headquarters.

One UK official told the Financial Times the Chancellor wants an 'exemption on financial services' on the second-part of the plan on the grounds that banks already pay local taxes in countries where they operate.

There are fears that Britain could unfairly lose out on tax revenues if UK-headquartered banks with large operations overseas are included in the scope of the plan.

Mr Sunak reportedly raised the issue at the meeting of G7 finance ministers, with one UK official telling the FT:'Our position is we want financial services companies to be exempt and EU countries are in the same position.'

However, the Chancellor is likely to face opposition to the demand from the US.

The White House is insistent that the plan should apply broadly amid concerns in Washington that the changes could unfairly target US tech giants.

The G7's tax plan was agreed following two days of talks in London and after years of discussion and was hailed by Mr Sunak as a 'historic' moment.

He said the changes will make the global tax system 'fairso that the right companies pay the right tax in the right places'.

The UK corporation tax rate is due to rise from 19 per cent to 25 per cent by 2023 under proposals announced by the Chancellor at the Budget in March.

Explaining the agreed tax reforms, a Treasury spokeswoman said: 'Under pillar one of this historic agreement, the largest and most profitable multinationals will be required to pay tax in the countries where they operate – and not just where they have their headquarters.

'The rules would apply to global firms with at least a 10 per cent profit margin – and would see 20 per cent of any profit above the 10 per cent margin reallocated and then subjected to tax in the countries they operate.

'The fairer system will mean the UK will raise more tax revenue from large multinationals and help pay for public services here in the UK.'

UK GovernmentRishi SunakUK EconomyLondon

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