It’s recently been announced that one of the changes that the G7 group hopes to enact over the coming years is a new global tax system designed to make multinational companies pay more tax in the countries they operate in, as well as a global corporate tax of 15%.
UK Chancellor Rishi Sunak is hoping to ensure that financial services firms are exempt from this system, no doubt considering that banks and financial services companies form the backbone of the UK economy.
Why should financial services firms be exempt?
As an important part of the UK economy, ministers want to ensure that the UK remains an attractive place for financial services firms and banks to operate in. The sector already contributes more than 10% of total government receipts from taxes and is a necessary part of the plan to get the UK economy back on track after Covid-19.
What does this mean for smaller businesses?
Luckily, smaller businesses will remain unaffected by this tax change. The new tax system will only apply to multinational corporations, in part perhaps because many people think these corporations do not generally pay enough tax.
If anything, this change should help to level the playing field between smaller businesses and MNCs, perhaps taking some of the pressure off individuals and small businesses who struggle with tax hikes. By increasing tax only for multinationals, small and medium businesses across the UK may be able to breathe a sigh of relief that the country’s wallet might be looking a little healthier with no extra help needed from their own pockets.
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