TaxCorporate TaxLondon under fire from US tax moves

London under fire from US tax moves

US tax law targeting multinationals threatens UK's status as a financial centre

city of London

A proposed US tax law that could levy a 30% tax on multinationals that take
advantage of the favourable US/UK tax treaty could threaten London’s status as a
premier financial centre.

According to an article in the FT, the new measure will apparently
prevent multinationals from skirting tax in the US by transferring funds from
the US to parent companies via countries with favourable tax treaties such as
the UK.

The proposed legislation, named the Doggett law after the Texas Democrat who
put it forward, will target the current system that allows companies with
headquarters in countries with no tax treaties with the US, such as Singapore
and Taiwan, to move cash into these jurisdictions through countries with tax
treaties.

An example would be South Korean group Samsung, which would no longer be able
to make tax-free transfers between the US and UK under the current
Anglo-American treaty.

Democrats, however, have emphasised that the law will be specifically focused
on tax haven that are used to hide earnings.

Further reading:

Darling on the offensive against UK ‘tax haven’
claims

International group set up to target tax haven
abuse

UK changes ‘will outdo Luxembourg’

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