G7 summit: Rishi Sunak says world cannot rely on tax system largely designed in the 1920s

Chancellor Rishi Sunak has told world finance leaders the world cannot “continue to rely on a tax system that was largely designed in the 1920s”.

Speaking at a G7 meeting in London on Friday, Mr Sunak added that the world had “high expectations” for what could be agreed by the finance ministers over the two-day summit.

And ahead of the meeting, Mr Sunak said he was “confident” he could secure a deal with the US over a controversial tech tax introduced by the UK in 2020.

Last March, Britain announced a 2% levy on revenues derived in the UK from online services such as search engines and social media companies.

The US has resisted the idea, imposing on Wednesday some $2bn (£1.4bn) of tariffs on imports, including from the UK, in retaliation for taxes on big US tech firms. However, it immediately suspended the tariffs for 180 days to allow talks to progress.

The crunch talks come as it was revealed that an Irish subsidiary of Microsoft paid no corporation tax on the $315bn (£222bn) in profit it made last year, according to The Guardian on Thursday.

The finance ministers from France, Italy, Germany, Spain and elsewhere in London on Friday will also discuss plans for a sweeping 15% global corporation tax that could raise $50bn (£35bn) to $80bn (£56bn) for governments around the world.

The idea behind the tax is to level the playing field globally, and remove jurisdictions where large multinational corporations are able to avoid paying tax.

Initially proposed by the US, the plan has support from all G7 member states apart from the UK.

Britain has, however, signalled it may be willing to scrap its digital services tax on tech platforms if it receives assurances from President Joe Biden’s administration that Silicon Valley giants such as Apple and Facebook will not be allowed to continue avoiding taxes.

“Securing a global agreement on digital taxation has also been a key priority this year – we want companies to pay the right amount of tax in the right place, and I hope we can reach a fair deal with our partners,” said Mr Sunak ahead of the meeting.

The group are also expected to discuss the issue of climate change, while Mr Sunak is understood to be pushing for companies to commit to climate reporting, such as disclosures around emissions.

“I’m determined we work together and unite to tackle the world’s most pressing economic challenges – and I’m hugely optimistic that we will deliver some concrete outcomes this weekend,” he said.

Source: Read Full Article