Responding to the recent global corporate tax talks, Michael Wistow, global head of tax at law firm McCarthy Denning, welcomed the proposals for a global digital tax but issued some caveats.
Wistow commented: "While this might be unwelcome in some quarters, it is a lot better than the alternative of an increasing proliferation of local taxes being introduced on a country by country basis.
"These all have bespoke rules and greater scope for Byzantine complexity, confusion and double taxation.”
But while the proposal has the potential benefit of being clear and creating a "level playing field globally", he said it also only applied to the largest and most profitable companies.
Last week, global leaders discussed a plan brought by US Treasury Secretary Janet Yellen, which mooted a minimum tax rate of 21 per cent.
As reported in FTAdviser on April 9, this was welcomed by some European MPs, who saw this as bid by global governments to avoid tax dumping and create a fairer playing field.
However, there would still be nothing to stop countries creating different tax rules. Wistow added: "It will be interesting to see if this is enough to stop countries introducing their own rules. That should be the aim.”
Increasing inheritance tax in the midst of a pandemic which has heavily impacted the elderly might be seen as, at best, insensitive.But this was not the only big tax proposal of the post-Easter break.
That same week, the International Monetary Fund called for a one-off 'pandemic wealth tax', where effectively the wealthiest companies and individuals would see temporary tax hikes.
This tax would be used to help pay the bill racked up by measures put in place to counter the coronavirus crisis.
But Victor Cramer, partner in the tax litigations and investigations team at law firm Stewarts, called it too "ardently politicised" to put into effect in the UK.
Cramer said: "It is such an ardently politicised issue that I can’t see it happening. The alternative is a non-hypothecated general increase in tax. This may well be coming, but will go against the Conservative manifesto pledges."
A hypothecated tax, or tax hypothecation, is where the revenue earned by that tax goes to a specific purpose, other than into the general Treasury coffers.
There are no hypothecated taxes in the UK; the TV licence is the closest thing to such a measure.
Cramer added: "If the intention is to focus on those who have best weathered the impact of Covid restrictions, then a long-overdue overhaul of some of the UK’s worst-functioning taxes, such as business rates, would probably do a better job than temporary surcharges.
"Also, increasing inheritance tax in the midst of a pandemic which has heavily impacted the elderly might be seen as, at best, insensitive.
"The IMF proposal would amount to a direct redistribution of wealth from rich to poor."
simoney.kyriakou@ft.com
