Shell would pay almost six times more tax than BP under Biden’s global tax plan, HSBC even more

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FTSE 100 mutitnationals such as Shell, Barclays, Rio Tinto and HSBC will have to pay between €450mln and €4.2bn in extra tax if Joe Biden’s global corporate tax plan is agreed, according to new research.

The US president has tabled a proposed 15% global corporate tax rate to be discussed at the upcoming G7 meeting.

An initial proposal of 21% was last week revised down by the Biden administration, though the White House said a global corporation tax should be “at least” 15%.

The UK’s corporate tax rate is 19%, currently the lowest in the G7 group of rich countries, although the Treasury’s plan is to steadily nudge it up to 25% by 1 April 2023.

European banks would have to pay 44% more in taxes if they were subject to a 25% country-by-country minimum tax, the EU Tax Observatory stated in a new report.

A company such as Royal Dutch Shell PLC (LON:RDSB), which voluntarily discloses its country-by-country profits and taxes, would also have to pay around 45% more in taxes if they were subject to a 25% minimum tax, or €2.9bn (£2.5bn). For a 15% tax rate it would have to pay €1.35bn more.

In contrast, rival BP PLC’s (LON:BP.) tax would climb by €485mln under a 25% global tax rate, or €193mln for 15%.

As for the banks, under a 25% tax rate, HSBC Holdings PLC’s (LON:HSBA) corporate tax bill would increase by an estimated €4.2bn (£3.6bn), the report suggested, with Barclays PLC’s (LON:BARC) bill growing by €911mln a year, NatWest Group PLC (LON:NWG) up by €907mln, Standard Chartered (LON:STAN) by €480mln and Lloyds Banking Group PLC (LON:LLOY) by just £37.4mln.

Other mentioned in the report include miners Anglo American PLC (LON:AAL) and Rio Tinto PLC (LON:RIO), which are calculated would see a €984mln and €430mln rises respectively; an increase for life insurers Prudential PLC (LON:PRU) and Legal & General Group PLC (LON:LGEN) of €578mln and €171mln respectively, and for former UK telecoms monopoly BT Group PLC (LON:BT.A) of just €21.5mln.

The researchers estimated how much tax revenue the European Union could collect by imposing a minimum tax on the profits of dozens of multinational companies, coming up with a figure of €50bn a year based on a 25% tax rate.

“We compute the tax deficit of multinational firms, defined as the difference between what multinationals currently pay in taxes, and what they would pay if they were subject to a minimum tax rate in each country,” the report explained, as well as suggesting three ways for EU countries to collect this tax deficit.

The report is supplemented by an interactive website, https://tax-deficitsimulator.herokuapp.com, a tool that the researchers say “allows policy makers, journalists, members of civil society, and all citizens in each EU country to assess the revenue potential from minimum taxation on both domestic and foreign firms”.

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