Rishi Sunak praises G7 corporate tax treaties
The Chancellor welcomed the “historic agreement” that was reached after a meeting of the G7 finance ministers earlier this month, in which the states committed to a global minimum corporate tax of at least 15 percent on a country basis. Tax advisor Bob Lyddon said the UK’s newfound freedom outside the bloc allowed him to forge an alliance with the United States – and President Joe Biden – that would have been unthinkable without leaving the EU.
Lyddon said the deal provides a mechanism that would allow the UK to reclaim huge revenues from tech giants who have enormous UK operations but are based in Ireland and Luxembourg for tax purposes.
He said Express.de: “It was a big financial problem for the UK while we were in the EU.
“It costs HMRC at least £ 10 billion a year. That is more than the net membership fee of an EU member.
Boris Johnson and US President Joe Biden
Rishi Sunak met with other G7 finance ministers earlier this month
“So when we were in the EU there was basically at least £ 10 billion in tax losses a year.
“We couldn’t win on this issue, we couldn’t even bring it up while we were in the EU. Impossible.”
Mr Lyddon said: “Firstly, the Commission has to take care of other Member States such as Luxembourg and Ireland, which are the source of the abuse.
“Everything we would do would be watered down so it was really difficult to make progress in discussions within the EU because it would really require a treaty change, it would require a change to the Treaty on the Functioning of the EU.
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Joe Biden and Boris Johnson at the G7 summit in Cornwall last weekend
“And such a change needs to be voted unanimously, and those countries would never vote for it – it would be turkeys that would vote for Christmas.”
Mr Lyddon, who first identified the problem in a report posted on the Brexit Papers website in 2019, said the deal was in fact in violation of the bloc’s internal market rules.
He said: “Because this new deal actually contradicts one of the four freedoms of the internal market, the freedom of establishment, that is, to guarantee companies and citizens the right to provide unrestricted services in every member state.
“If it does not abolish the freedom of establishment, it will change the rules considerably in this area so that Member States can not only attract companies because of tax competition.
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Rishi Sunak and the French Finance Minister Bruno Le Maire
Tax rates shown
“This severely restricts the freedom of establishment in the internal market and that is important.”
Not being a member of the EU was crucial, stressed Mr Lyddon.
He explained, “How could we have teamed up with the US and Biden while we’re still in the bloc?
“Biden said that one day my heart will be in Dublin. Well, his heart may be there, but his wallet is on Pennsylvania Avenue.
Boris Johnson’s cabinet
“We are on the same side and we would never have made these negotiations within the EU because we negotiated through the EU and suspended its watering down to serve Luxembourg and Ireland.
“If HMRC does its job right, they could easily make £ 10 billion a year from it.
“You need to check all accounts that came in from Facebook, Google, Amazon UK etc because they all have a UK company.
“You can’t accept any of these allegations that are thrown together, the use of intellectual property, license fees that could mitigate that.
“President Joe Biden’s wallet is on Pennsylvania Avenue,” Lyddon said
“You have to say this is an international agreement, there is the number and you pay 19 percent or more, 25 percent.
“Rishi Sunak has to give detailed instructions to companies to tell companies, here is your bill, pay it, and if you challenge it successfully, you can have your money, but the first thing to do is pay. It’s time to play hardball. “
In his June 5 speech, Mr. Sunak said the need for national taxes on digital services would be eliminated once the global solution is in place.
He added: “After years of discussion, the G7 finance ministers reached a historic agreement to reform the global tax system to make it fit for the global digital age.”