Liberal Democrats are committed to ensuring that all businesses operating in the UK pay tax in the UK on those operations and also to restricting the ability of companies to unfairly shift profits out of the UK to low tax jurisdictions.
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In more detail
Liberal Democrats are committed to ensuring that all businesses operating in the UK pay tax in the UK on those operations and also to restricting the ability of companies to unfairly shift profits out of the UK to low tax jurisdictions.
We want a business tax system that encourages productive investment and empowers responsible companies to grow and generate more tax revenue to fund British public services. To that extent we have backed policies such as simplifying capital allowances, raising the Annual Investment Allowance and expanding Writing Down Allowances to tackle Britain’s chronically sluggish business investment.
But Liberal Democrats are clear that all businesses must pay their fair share of tax in the UK.
We are committed to introducing a General Anti-Avoidance Rule, setting a target for HM Revenue and Customs to reduce the tax gap and investing in more staff to enable them to meet it. Additionally, some of the world’s largest and most successful companies, including Google, Amazon and Facebook are currently avoiding paying taxes in the countries where they operate. They have been able to exploit the international tax system to shift their profits and hide in tax havens, and this should not be allowed to continue. For that we need an effective global corporation tax system, including a global minimum rate of corporation tax
At the G7 summit in June 2021, major economies reached an international consensus on tackling tax avoidance. Liberal Democrats are proud to support that breakthrough championed by President Biden, but we are disappointed that the UK Government failed to push through some key improvements that would have made the system fairer and more effective and would have netted the UK an additional £6.8 billion year.
We continue to press the Government to back President Biden’s proposal for a global minimum rate of corporation tax at 21 per cent - rather than the 15 per cent favoured by the current UK administration.
Our plan to improve the international tax agreement adopted by the G7 also includes:
- Closing loopholes which could allow tech-giants such as Amazon to avoid tax due to a 10 per cent profit threshold.
- Keep the Digital Services Tax until the deal is implemented. This is the tax on search engines, social media platforms and online marketplaces. Withdrawing from this as the government plans could result in a combined tax cut of £232.5 million for Amazon, Facebook, Google and eBay.
- Work with low and middle-income countries to ensure the global corporation tax rate benefits them too.
Business tax shouldn't be punitive or stifle innovation, but Liberal Democrats firmly believe that profitable companies should pay their fair share of tax where they operate and not be allowed to unfairly shift their profits to overseas tax havens.