Global Britain : Influencing Tax policy

At first sight, the UK’s prominent role in the ‘transformation’ of international tax in recent years is an exemplar of Global Britain at work: using its influence on the world stage to support stronger, more effective international tax cooperation. Arguably it was at the London G20 Summit of 2009 that the transformation towards more intensive multilateral tax cooperation began. Successive British prime ministers and chancellors, before and after the Brexit vote, gave vocal support to ambitious Organisation for Economic Cooperation and Development (OECD) initiatives that began there. In particular, the UK sought to use its chairing of the G8 in 2013 and G7 in 2021 to achieve breakthroughs in OECD negotiations. Yet, in multilateral tax cooperation the UK has historically been sceptical towards the creation of new soft and hard law institutions. It opposed the creation of tax committees at the UN after the second world war and again in the 1960s; it was hostile to the OEEC Committee that became the OECD’s Committee on Fiscal Affairs, as well as to its early attempts to formulate transfer pricing guidelines; the UK was also consistently opposed to any move away from consensus decision-making on tax matters in the EU. In this article, we analyse whether Global Britain is indeed ‘championing the rules-based international order’ in international taxation, or whether it hinders it. We demonstrate that the UK has frequently objected when multilateral organisations take on tax cooperation mandates. Once the momentum behind such a mandate becomes unstoppable, however, the UK places itself at the heart of multilateral tax negotiations and institutions. Unable to influence the general direction of travel, it maximises its influence over the details so as to ensure that initiatives are less intrusive in areas where it seeks to retain sovereignty. This strategy implies the potential for two contradictions: first, that sometimes the UK sometimes finds itself in the position of chairing discussions whose general direction it does not support (perhaps the best position to which a country without great political influence could aspire); second, that its publicly stated ambitions for a negotiation round in which it occupies a leading role are may be at odds with the more conservative direction in which it is pushing in private. The paper proceeds as follows. Section 1 gives an overview of the landscape of international tax negotiations and the UK’s approach to the organisations within that arena. In Sections 2 and 3, we examine the UK’s influence on OECD and EU tax initiatives respectively. In Section 4, we consider whether Brexit will have a material impact on the UK’s influence. In Section 5, we conclude with some thoughts on the power dynamics that will influence UK international tax policy