More than 70 business leaders are calling on the UK government to back a “once-in-a-generation” deal to stop rampant tax avoidance by multinational companies.
The group has written to ministers urging them to support plans to make companies pay a minimum 21 per cent tax on their profits – a move that would remove the incentive to shift revenues into tax havens.
If enacted, a global minimum tax rate could raise up to £13.5bn in the UK, according to campaign group Tax Justice UK.
Signatories to the letter, coordinated by Partners in Progress, include more than 40 UK entrepreneurs along with others from around the world.
Among them are former senior Facebook executive Brian Boland; James Timpson, founder of Timpson; and Jerry Greenfield, co-founder of the Ben and Jerry’s ice cream brand.
“Businesses should succeed not because they cut corners or avoid paying their fair share of tax, but because they build fantastic teams and products,” the group wrote.
Campaigners say that a deal, which is to be discussed at a G7 meeting in the UK in June, would be a significant step towards ending multinational tax avoidance. Finance ministers from the seven nations are scheduled to meet on Friday, ahead of the main summit.
Other European states, including France, Germany and Italy, have supported the proposal put forward by US president Joe Biden. While the UK has indicated that it wants a deal on tax, it has yet to publicly express support for Mr Biden’s plan.
New research by Demos, a think tank, found that large companies want the global tax system to be simplified and broadly support the US proposal.
Shadow chancellor Rachel Reeves said the report, based on 20 interviews with tax directors at large firms, sent a clear message.
“Those paying their fair share have had enough of being undercut by tax-dodging multinationals and online giants,” Ms Reeves said.
“In coming days, we have a once-in-a-generation opportunity to level the playing field, curb major tax avoidance, and get behind British businesses on our high street and beyond.”
US Treasury secretary Janet Yellen put forward a 21-per-cent corporate tax rate in April. Mr Biden's administration has since put forward a plan for a 15-per-cent rate in the hope that an agreement can be reached this summer.
The US Treasury has emphasised that 15 per cent is a floor, and that discussions should “continue to be ambitious and push that rate higher”.
Gemma McGough, founder of Eleos Compliance, which signed the letter to the UK government, said: “It is very clear that British businesses are undermined by big multinational companies paying lower levels of tax than the rest of us.
“This proposal would mean British businesses have a level playing field to compete on. It would be great to see our government get a deal that helps end tax avoidance.”
Negotiations will reach a critical point at the G7 meeting next month with most rich countries supporting the plan. It is hoped that an agreement would spur progress in talks being led by the OECD group of wealthy nations.
Tessa Clarke, chief executive of tech company OLIO, said: “Right now the playing field is tilted massively in the favour of multinationals who exploit jurisdictions and loopholes to get away with paying as little tax as possible.
“This is not only to the detriment of society, it also stifles innovation and entrepreneurship as smaller businesses simply can't afford to engage in these shenanigans and so operate with much higher cost bases.
“Biden's call for a level playing field is much needed and will take us one step closer to a more vibrant and fair market.”