I have been asked by a journalist to look at how big the tax hit on banks might be from the G7 tax deal.<\/p>\n
I chose to look at Barclays<\/a>. It made a pre-tax profit of \u00a33,065m in 2020 in turnover of \u00a321,766m. That's a margin of 14%. It is in the range of the G7 tax adjustment.<\/p>\n However, a 10% margin is not adjusted. Only the excess over that is. And then just 20% of that is reallocated to the places where profit is earned. So, Barclays is at risk of 0.8% of turnover being reallocated, or \u00a3174 million. The UK could (but may well not) lose tax on this.<\/p>\n But how big would the adjustment be, overall? Barclays declared current tax in 2020 of \u00a31,286m. There are many questions to resolve on whether this is the right figure. See here<\/a>. But let's assume it right for the moment. That is a current tax rate of almost 42%, with a\u00a0 significant deferred tax offset it must be said.<\/p>\n Is it likely that there will be a major adjustment with a 42% tax rate? No, is the simple answer.<\/p>\n So, Sunak is fussing about not a lot. This so-called Pillar 1 adjustment is not the big deal from the weekend. The big deal is that the 15% global minimum tax rate is much too low. Suinak has yet again spectacularly missed the point.<\/p>\n","protected":false},"excerpt":{"rendered":"