City of London 'seeking exemption from global minimum tax'

Wednesday 09 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.

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.

The Chancellor was 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 set to be discussed by the G20.

"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 President Joe Biden put forward proposals that looked beyond 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) to progress further.  

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 Jersey and Guernsey, which the islands have long used to attract business.

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.

The Government of Jersey has always maintained its support for maintaining a “level playing field” among tax jurisdictions globally. 

Express asked the External Relations Department for comment this morning on the City of London’s potential exemption, but a spokesperson said it declined to comment on “speculation in the FT”. Jersey Finance said they also felt it too early to comment.