The Adam Smith Institute’s latest paper, written by Dr. Tyler Goodspeed, calls for a rethink of the UK’s decision to rush implementation of a global minimum corporate tax rate.

• The UK’s decision to rush the implementation of a global minimum corporate tax rate will undermine the levelling-up agenda, hurt the competitiveness of key UK industries, pose unique challenges for the insurance and reinsurance service sector and fail to raise substantial revenue;

• Proposed rules could undermine key areas of UK tax policy including investment zones and freeports, business tax credits, super-deductions for the depreciation of equipment investments, and accelerated cost recovery for new investments in intellectual property, which makes up over one-third of all UK investment;

• Negotiations and technical considerations remain ongoing at the OECD, while the EU is moving forward with their own planned implementation. Moving forward before global rules are finalized risks imposing significant transition costs on UK companies and multiple rounds of transition costs for HM Revenue and Customs, undermining the ability of British businesses to compete on the international stage;

• The insurance and reinsurance service sector — one of the UK’s biggest financial services industries — faces unique challenges from the proposed changes, including excess tax liability, the risk of double taxation and high compliance costs;

• Under current plans, implementing the global minimum tax is unlikely to raise substantial revenue — low-tax jurisdictions could continue to compete for out-of-scope enterprises by lowering their corporate tax rates;

• The UK’s early implementation of global minimum tax rules is fraught with risk and policymakers should carefully scrutinize current proposals to limit their potential economic damage.