City of London "seeking exemptions from global minimum tax"

Thursday 10 June 2021

The City of London could be made exempt from a plan to set a global minimum corporation tax if the UK Chancellor gets his way, it has been reported.

Rishi Sunak is said to have raised the issue at G7 talks in London, and is apparently due to make the case again when the global tax reforms are discussed by the G20 in July.

"Our position is we want financial services companies to be exempt and EU countries are in the same position," one official was quoted as saying.

Pictured: Chancellor Rishi Sunak reportedly made a push for an exemption for the City of London during the G7 meeting.

Global tax reforms have been under discussion for many years, originally intended to ensure that multi-national firms pay a ‘global minimum’ of tax.

It was originally focused on tech giants like Apple, Amazon and Google, but in April, US President Joe Biden put forward proposals with an extended reach beyond just tech firms. Based on the 100 most profitable global businesses, his plans bring financial services into the firing line.

While the G7 agreed to a 15% minimum rate over the weekend, the plan still requires approval from the G20 and the Organisation for Economic Cooperation and Development (OECD).

If the plans make it through the final stages, it could spell the end of the ‘Zero-Ten’ regime – a corporate tax rate of 0% on profits and 10% for financial services institutions - in Guernsey and Jersey, which the islands have long used to attract business.

Pictured: Guernsey's Treasury Lead Mark Helyar has refuted suggestions that the new global standard will bring about the end of Guernsey's Zero-Ten regime. 

If the City of London – which has long been Jersey and Guernsey’s biggest customer for financial services – is granted an exemption from the new regime, it could put the Channel Islands on uneasy footing.

However, Guernsey's Treasury Lead Deputy Mark Helyar has refuted suggestions that it signals the end of Zero Ten, contesting that it will have very little effect on the island. 

“If it’s approved, it’ll help level the playing field in terms of multi-national tax," said Deputy Helyar. 

The Government of Jersey has put its support behind a “level playing field” among tax jurisdictions globally, but has declined to comment on "speculation" about London City.