www.li.com Commentary - Taxation Without Representation: the heavy burden of the OECD’s global

The UK does not believe that the com- petitiveness of the EU would be helped by a harmonised company tax base and remains sceptical about both the principles and the practicalities.” The same objections can be raised to the OECD minimum tax proposal, with two crucial differences. [...] There is clearly a tension between a general proposition that it is right and in the interests of the UK to maintain the flexibility and independence that comes with leaving the EU and signing up to a new measure that will constrain ministers on a key part of economic policy. [...] Cuts to the statutory rate The higher the statutory rate, the less likely that the minimum effective rate will be binding and therefore the less likely businesses are to pay more tax than is intended with the prevailing reliefs and allowances. [...] This is one of the reasons for con- gressional scepticism in the US, which it is working to address with the OECD behind the scenes, and the UK should have similar concerns. [...] While the impact will vary by company, the likely pattern is an incentive to relocate to the United States in the short-term and low-tax jurisdictions in the medium-term.