London and Switzerland are seeking ways to dodge the global minimum tax Biden is pushing at the G7

Joe Biden touching Boris Johnson at the g7 summit in the UK
Prime Minister Boris Johnson speaks with US President Joe Biden at Carbis Bay Hotel on June 10, 2021, near St Ives, England.
  • G7 finance ministers agreed a global corporate minimum tax of 15% at the UK summit on Saturday.
  • The plan is aimed at tech giants, but some nations worry their financial districts will be hit.
  • Switzerland is discussing how it will mitigate the tax and The City of London wants an exemption.
  • See more stories on Insider's business page.

The City London and Switzerland are aiming to mitigate the effects of the global minimum tax plan agreed by the G7 group of nations.

On Saturday, G7 finance ministers meeting in Cornwall, UK, agreed a global corporate minimum tax of 15%, which companies would need to pay in each country where they operate.

The plan was first put forward by US Treasury Secretary Janet Yellen.

Many companies register themselves in countries with favorable tax rates, like Ireland and Switzerland. The G7 plan is an attempt to impose extra costs on that practice.

Activists have long complained that companies like Google, Amazon, and Facebook avoid paying millions in tax due to their use of tax havens.

But the City of London and Switzerland are already working to ensure they don't get badly hit by the minimum tax rate, as they fear it will make their financial districts less attractive.

The central Swiss government has discussed ways to offset the G7's minimum tax rate with the 26 Swiss cantons, according to the Financial Times.

Possible measures include social security deductions and tax credits, the FT said.

Ernst Stocker, the finance chief of the Zurich canton, told the SRF broadcaster on Monday that the country needs to stay attractive to businesses, and may need to introduce new tax deductions.

In the UK, Chancellor Rishi Sunak is worried that banks based in the City of London, whom he says pay adequate tax, will be wrongly dragged into the 15% rate.

London's finance sector is of disproprtionate importance to the UK economy, and is a hub for business activities from all over the world.

Sunak is attempting to get the City of London an exemption to any minimum tax rate, according to reports.

A source close to the G7 talks told the Guardian that several other EU countries want financial services to be excluded from the minimum rate.

"The Europeans don't want to pull too many companies into this, they're mostly interested in US tech," the source said

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