Labour ramps up challenge to the Government on global minimum corporation tax

Labour is ramping up its call on the UK Government to back the global minimum rate of corporation tax being proposed by President Biden at the upcoming G7 summit.

The party has tabled a new clause, published this morning (Thursday) by the House of Commons, calling on the Government to review the impact of the proposal in the upcoming Finance Bill, which will debated on Monday 24 May.

Labour say if the Government don't back the proposal, they will be undermining a global deal to tackle major tax avoidance - as well as allowing British businesses to continue to be undercut by a small group of huge multinational corporations and online giants.

Britain is now the only G7 country to not back the plan, with Germany, France, Canada, Italy and Japan already supporting Biden’s proposal.

James Murray MP, Labour’s Shadow Financial Secretary to the Treasury, said:

“The Government have promised to get tough on tax avoidance, but they have failed every time.

“This global pact will bring in billions of pounds in extra tax benefitting Britain, while stopping huge multinationals and online giants from undercutting our businesses.

“By making sure they pay their fair share in Britain, we can level the playing field for our brilliant businesses, and build an economy fit for the future, with thriving industries, and good, secure jobs for all.”

The clause reads:

Review of impact of a global minimum rate of corporation tax

(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, publish a review of the impact on corporation tax revenues for the financial years 2022 and 2023 of a global minimum rate of corporation tax set at (i) 21 per cent in both years and (ii) 21 per cent in 2022 and 25 per cent in 2023.

(2) Any review under this section must include an assessment of the impact of a global minimum rate of corporation tax on:

1. a) levels of tax avoidance and evasion, and
2. b) the size of the tax gap in financial years 2022 and 2023.

Ends

Notes to Editors

• 21 per cent is the rate Biden has initially proposed. 25 per cent is the rate the Government propose domestically in the Finance Bill for financial year 2023. Section 6 of the Finance Bill commits the Government to raising corporation tax to 25 per cent in the UK in financial year 2023 (see page 2 of the Bill at:https://publications.parliament.uk/pa/bills/cbill/58-01/0295/200295.pdf)
• Germany: "I, personally, have nothing against the US proposal," Scholz told the German newspaper.
• France: "If that is the result of negotiations, we would also be agreed," Le Maire added.
• Italy: Mario Draghi, Italy’s prime minister, who also chairs the G20 this year, said he was “fully behind [the US] call for a global minimum corporate tax”.
• Japan: Speaking on the eve of a virtual gathering of financial leaders from the Group of Seven rich nations and the G20 major economies this week, [finance minister] Also welcomed U.S. Treasury Secretary Janet Yellen's calls for the introduction of a global minimum corporate tax rate.
• Canada: Canada’s finance minister has called the US proposal for a global minimum corporate levy a “breakthrough moment” in deadlocked international tax talks.