Taxation: International Cooperation
The question
To ask the Chancellor of the Exchequer, what estimate she has made of the potential impact of the G7 agreement on global minimum tax on additional revenue to the public purse in each of the next five financial years.
Answered by James Murray
The Chancellor, alongside her G7 counterparts, has reached an understanding on a proposed path forward for the global minimum tax, Pillar 2 of the G20/OECD Inclusive Framework project on Base Erosion and Profit Shifting (BEPS).
The G7 published a statement last week that set out our commitment to the core objectives of Pillar 2: tackling multinational tax avoidance and promoting a stable global tax environment that supports fair competition.
Recent discussions have taken into account concerns raised by the US Treasury regarding the interaction of the Pillar 2 rules with the US minimum tax system, and have focused on developing a side-by-side approach that maintains a level playing field.
Importantly, this agreement includes the removal of the retaliatory tax provision (Section 899) in the US’s legislative proposals, which would have imposed a significant additional tax burden on British businesses.
The understanding reached by the G7, and the principles underpinning it, will now be developed in detail and need to be agreed within the wider OECD/G20 Inclusive Framework, which comprises over 140 countries and jurisdictions.
Any changes to UK policy resulting from the final, negotiated solution, will be fully costed by the Office for Budget Responsibility (OBR).
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