Financial services companies should be excluded from the G7 tax proposals, say leading tax and advisory firm Blick Rothenberg

Phil Vipond, a partner and head of financial services at the firm said:” The purpose of the agreement is targeted at multinational tech companies, and the design of the proposals do not sit particularly neatly with how FS businesses operate in reality.”

He added: “ The FS sector is already subject to a number of sector specific tax arrangements, which are designed to ensure that FS profits are taxed in the appropriate jurisdiction – therefore, you would question why the G7’s overarching proposals should apply and a carve out is justifiable.”

Phil said: “ Whilst there is scope for better international co-operation it should be implemented in a way that is appropriate to FS businesses.

He added: There are obvious differences between the multinational tech companies and FS firms, and these were highlighted in the OECD document of October 2020.

Phil said: The main difference is that FS firms are very heavily regulated, and these regulations require them to have a substantial and well capitalised (and taxable) presence in those territories where they are operating.

He added: “ This also opens the door on whether stronger regulation of multinational tech companies would serve a more effective method of taxation than the G7 tax proposals.”