Wednesday 30 June 2021 9:23 pm

City of London 'set for exemption from new global tax rules'

The City of London is set to win an exemption from new global proposals for taxing multinational companies in a boon for the Square Mile’s largest banks.

The FT reported that Britain’s pitch for a carve-out for its financial services sector has been accepted in the ongoing talks at the OECD in Paris.

But sources said that as recompense for the exemption, the UK would have to get rid of its digital services tax.

Many major banks are headquartered in the City, but generate more than half of their income elsewhere.

HSBC, for example, generates more than half of its income from China but is the UK’s biggest bank by revenue.

Earlier this month it was reported that Chancellor Rishi Sunak would use the Paris talks to push for a carve-out for the Square Mile.

The FT said that the exemption was agreed as part of the first part of the talks, in which the OECD nations are trying to define where the largest multinationals would have to pay tax.

In the second half of the negotiations, attention will turn to trying to agree a global minimum tax rate of at least 15 per cent.

Such a deal aims to end what US treasury secretary Janet Yellen has called a “30-year race to the bottom on corporate tax rates” as countries compete to lure multinationals.