Many believe a forced

rewiring of the world’s fi nancial system would be economically harmful in the short term

28 per cent rate. It would also be far lower than the UK, where the rate is 19 per cent and is due to rise to 25 per cent in April 2023. Either way, as one well respected international tax adviser made

clear, the methods of tax mitigation used in the past – such as the expenses from intra-company royalty payments between overseas subsidiaries (similar to those incurred legitimately between Amazon’s European HQ in Luxembourg and its various country operations, which helped it report a loss in the region last year despite Ð44 billion in sales) – are going to be harder to justify: ‘I think the age of the “paper companies” is getting more and more diffi cult to sustain [with] those kinds of techniques that we saw in the past.’ None of the tax advisers who spoke to Spear’s have any objection to companies paying the ‘right’ amount of tax – particularly in an age when governments around the world have almost bankrupted themselves in the battle against Covid. But many believe a forced rewiring of the world’s fi nancial system would be economically harmful in the short term and is therefore undesirable. And the prospect of a global minimum tax acting as yet another disincentive for marginal investments in developing countries is another drawback – one that affects some of the poorest people in the world.

WHAT OF THE SHAREHOLDERS, meanwhile? Wealth manager Max Thowless-Reeves, a partner at Sorbus, believes ‘it’s just a tweak on the spreadsheet’ for the companies concerned. ‘I don’t see it being a material consideration for investors in them,’ he says. Likewise Russ Mould, investment research director at AJ Bell, is sanguine about the impact of potentially $150 billion in extra corporate tax on companies and investors. ‘It’s a number,’ says Mould. ‘But it’s not a life-changing number or strategy-changing number.’ Nonetheless, once the tax becomes a certainty, analysts will start crunching these numbers – and then the markets might adjust. ‘It’s not an incremental positive,’ notes Mould. ‘It’s a higher cost and therefore that affects earnings per share. Some companies will therefore have less cash fl ow; they may be more parsimonious with their dividends or share buybacks.’

But will it happen? Will there be a global minimum rate of corporation tax of 15 per cent – for the world’s largest multinationals at least – by 2023? It all depends on forthcoming elections in France and Germany and, crucially, the 2022 US mid-terms, according to the political analyst Tina Fordham of Avonhurst. ‘If we see a shift to non-mainstream political leadership in any of these big elections, then this is probably toast,’ says Fordham. However, given the costs of fi ghting Covid and public angst about the levels of tax paid by some of the world’s largest companies, the political will and public thirst are there to make corporates pay more. Despite the uncertainty, Fordham reckons that ‘some form of agreement is probable’. Say it quietly, but it seems that in and of itself, the 15 per cent might not be the end of the world. But what if – at a future G7 or G20 meeting – the fi nance ministers collectively decide, as indeed they might, that they need more dosh in their coffers? That global minimum could always rise – it wouldn’t hurt any of the big countries who have higher rates anyway – or the turnover threshold could be lowered to widen the net. What we can expect, predicts Mark Pragnell, is internal fi nancial restructuring as companies prepare. ‘The danger for investors, and for the global economy at large, is longer term,’ the economist predicts. ‘With the precedent set that big countries can impose their tax will on other smaller jurisdictions, tax competition between nations is weakened.’ That, of course, is precisely what Pascal Saint-Amans wants. S


Filippo Noseda

Mishcon de Reya Filippo Noseda’s battle against the US government’s Fatca legislation – and its consequences for normal people – has helped establish his presence at the forefront of his fi eld. A true internationalist, he is qualifi ed in England, Switzerland and the BVI.

James Quarmby Stephenson Harwood

‘In times of turbulence, HNWs want to talk to their lawyers,’ says James Quarmby, who has gone toe-to-toe with John Humphrys on the T


programme. Quarmby reports an ‘extremely busy’ pandemic – with enquiries showing no signs of abating yet.

Camilla Wallace Wedlake Bell

‘I translate complex areas of the law into plain English,’ says top tax lawyer Camilla Wallace. As head of the private client group at Wedlake Bell, she heads up one of London’s longest established tax and trust practices, dating all the way back to 1780.

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