A G7 agreement to establish a minimum tax rate on big tech and other companies could bring in billions of dollars in revenue for Britain and EU governments, a report says.
The plan for a global minimum to prevent companies from gaming the system is favoured by US President Joe Biden and will be discussed at talks between G7 finance ministers beginning on Friday.
Washington wants a minimum of at least 15 per cent, but there are calls for a higher floor, such as 21 per cent or 25 per cent.
Research unveiled by the European Tax Observatory found the revenues of EU countries could rise by more than $200 billion a year at the higher rate.
In this scenario, EU countries would force companies to make up the difference at home if they pay a lower rate in overseas tax havens.
This would make it impossible for companies to lower their bills by setting up shop in low-tax countries such as Ireland.
Ireland's corporate tax rate of 12.5 per cent is one of the lowest in the world, attracting a clutch of tech companies, such as Google and Facebook.
“Offering low corporate tax rates is a fundamentally unstable development strategy, one that only works as long as other countries choose to accept tax competition – and stops to work as soon as they refuse it,” the Brussels-funded observatory said in its report.
“If it wants to generate significant resources, for instance to pay for the cost of the Covid-19 pandemic, it is thus essential that the European Union polices its own multinationals.”
Britain would also be in line for extra revenue, with companies such as BP and HSBC facing much higher tax bills.
But the UK has stayed on the fence about the proposal despite support for the US initiative from France and Germany.
Britain plans to increase its corporate tax rate from 19 per cent to 25 per cent to rebuild its virus-battered finances.
The left-leaning Institute for Public Policy Research said backing the Biden plan could give the UK a "triple win" by boosting revenues, improving the tax system and showing global leadership.
But the right-leaning Institute for Economic Affairs condemned the plans as a "bureaucratic nightmare" that would be plagued by practical problems.
German Finance Minister Olaf Scholz said G7 nations were "very close to concluding an international agreement" that would lead to a "revolution in multinational corporate taxation".
Finance ministers will gather in London on Friday and Saturday before leaders, including Mr Biden, descend on Cornwall for next week's G7 summit.
Ireland, which is not in the G7, said it had “significant reservations” about the US tax proposal.
French European affairs minister Clement Beaune said Ireland was the EU member most hostile to the idea, with Cyprus and Malta also sceptical.
The G7 is also expected to discuss the post-Covid recovery, climate change and digital currency regulation.
UK Chancellor of the Exchequer Rishi Sunak is urging the G7 to foster a “green and global economic recovery” in the run-up to November’s Cop26 climate summit in Glasgow.
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UAE currency: the story behind the money in your pockets
TEACHERS' PAY - WHAT YOU NEED TO KNOW
Pay varies significantly depending on the school, its rating and the curriculum. Here's a rough guide as of January 2021:
- top end schools tend to pay Dh16,000-17,000 a month - plus a monthly housing allowance of up to Dh6,000. These tend to be British curriculum schools rated 'outstanding' or 'very good', followed by American schools
- average salary across curriculums and skill levels is about Dh10,000, recruiters say
- it is becoming more common for schools to provide accommodation, sometimes in an apartment block with other teachers, rather than hand teachers a cash housing allowance
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2018 ICC World Twenty20 Asian Western Regional Qualifier
Saturday results
Qatar beat Kuwait by 26 runs
Bahrain beat Maldives by six wickets
UAE beat Saudi Arabia by seven wickets
Monday fixtures
Maldives v Qatar
Saudi Arabia v Kuwait
Bahrain v UAE
* The top three teams progress to the Asia Qualifier
MATCH INFO
Uefa Champions League final:
Who: Real Madrid v Liverpool
Where: NSC Olimpiyskiy Stadium, Kiev, Ukraine
When: Saturday, May 26, 10.45pm (UAE)
TV: Match on BeIN Sports
NYBL PROFILE
Company name: Nybl
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Based: Dubai, UAE
Sector: Software Technology / Artificial Intelligence
Initial investment: $500,000
Funding round: Series B (raising $5m)
Partners/Incubators: Dubai Future Accelerators Cohort 4, Dubai Future Accelerators Cohort 6, AI Venture Labs Cohort 1, Microsoft Scale-up
MATCH INFO
Uefa Champions League, Group C
Liverpool v Red Star Belgrade
Anfield, Liverpool
Wednesday, 11pm (UAE)
Jewel of the Expo 2020
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550 tonnes of moulded steel were raised last year to cap the dome
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The White Lotus: Season three
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A Long Way Home by Peter Carey
Faber & Faber
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
