Following two days of talks in London with G7 finance ministers, including colleagues from the US and Germany, Rishi Sunak announced that they had signed up to having a corporation tax rate of ‘at least 15%’.
Changes will also be made to ensure major corporations, especially those with a strong online presence, will pay taxes in the countries where they operate and not only where they have headquarters.
The new policy is thought to be aimed at the likes of tech giants Amazon and Microsoft.
Speaking after a meeting at Lancaster House, the Chancellor said: ‘I am delighted to announce that today, 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, but crucially to make sure that it is fair so that the right companies pay the right tax in the right places and that’s a huge prize for British taxpayers.’
Although it is expected it will take many years for the new minimum rate to be introduced, it will eventually bring an end to Jersey’s zero-ten corporation tax regime.
Under the system, a large number of companies pay no tax, while certain sectors pay at a rate of 10% or 20%.
The zero-ten system was introduced in Jersey in 2009 after the EU Code of Conduct Group took the view that the Island’s previous exempt-company-status regime was unfair.
Under that system foreign-registered companies were not taxed as long as they paid a £600 annual fee.
