Rishi Sunak praises G7 corporate tax agreement

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The Chancellor hailed the ”historic agreement”, struck after a meeting of G7 finance ministers, earlier this month, with countries committing to a global minimum corporate tax of at least 15 percent on a country by country basis. Tax consultant Bob Lyddon said the UK’s newfound freedom outside of the bloc had enabled it to forge an alliance with the United States – and President Joe Biden – which would have been unthinkable if it had not quit the EU.

Mr Lyddon said the deal offered a mechanism that would enable the UK to recoup large sums of revenue from tech giants which have enormous operations in the UK but are based for tax purposes in Ireland and Luxembourg.

He told Express.co.uk: “It was a major financial issue for the UK while we were inside the EU.

“It costs HMRC at least £10billion pounds per annum. That’s more than the net membership fee of being in the EU.

“So basically while we were in the EU there was £10billion in lost tax per annum, at least.

“We could not win on this issue, we couldn’t even raise the issue, while we were in the EU. Impossible.”

Mr Lyddon explained: “Firstly, the Commission has got to cater for other member states, such as Luxembourg and Ireland, who are the source of the abuse.

“Anything we would do would be watered down so it was really difficult to get some progress within the 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.

“And such a change has to be voted on unanimously, and these countries would never vote for that – it would be turkeys voting for Christmas.”

Mr Lyddon, who first identified the problem in a report published on the Brexit Papers website in 2019, said the deal actually ran counter to the bloc’s single market rules.

He said: “Because, actually, this new deal contradicts one of the four freedoms of the single market, that of freedom of establishment, in other words guaranteeing companies and citizens the right to provide services without restrictions in any member country.

“If it doesn’t cancel the freedom of establishment, in this area it changes the rules significantly so that member states can’t just attract business because of tax competition.

“So that freedom of establishment in the single market is strongly circumscribed and that’s important.”

Not being a member of the EU had been crucial, Mr Lyddon stressed.

He explained: “How could we have buddied up with the US and Biden if we still in the bloc?

“Biden said at some point my heart is in Dublin. Well, his heart may be there but his wallet is on Pennsylvania Avenue.

“We are on the same side and we’d never have managed this bargaining, within the EU, because we would have had to negotiate through the EU and subjected to their watering down to cater for Luxembourg and Ireland.

“If the HMRC do their job properly, they could get £10billion a year out of this, easily.

“They need to examine all the accounts that have come in from Facebook, Google, Amazon UK etc because they’ve all got a UK company.

“They must not accept any of these charges that would get cooked up, usage of intellectual property, royalties, that might diminish that.

“They need to say, this is an international agreement, there’s the figure and you pay 19 percent or more, 25 percent.

“Rishi Sunak needs to issue detailed instructions to say to companies, here’s your bill, pay it and if you successfully challenge it, you can have your money but the first thing is to pay up. It’s time to play hardball.”

Speaking on June 5, Mr Sunak said the need for national digital services taxes would fall away once the global solution is in place.

He added: “After years of discussion, G7 finance ministers have reached a historic agreement to reform the global tax system to make it fit for the global digital age.”

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