Brexit Questions: Can UK businesses ignore the proposed EU financial transactions tax?
Neither argument looks compelling at present but the policy point looks the more convincing of the two. Early indications are that the EU is unlikely to engage with the UK Government until Article 50 of the Lisbon Treaty is invoked and the key jurisdictions in favour of the EU FTT (France, Germany, Spain and Italy) have substantially higher corporate tax rates than the UK. However, the French Government is understood to be planning to cut its corporate tax rate and Spain is rumoured to be considering using its tax system to encourage investment. While Brexit may not be enough to convince a jurisdiction to abolish a tax it already imposes (such as the individual country FTTs that already exist), it may make EU jurisdictions a little wary of imposing broad new taxes.
In contrast, the technical argument is inaccurate, at least as things stand. The FTT proposals are effectively extra-territorial so will affect UK businesses, whether or not the UK is in the EU, unless they are narrowed down significantly. The UK was never going to participate in the FTT, even as a member of the EU, and yet the UK Government was sufficiently concerned about the impact of the proposals in the UK to launch an (ultimately unsuccessful) challenge in the Court of Justice of the European Union.
There remain, however, wider questions about the viability of the FTT proposals. They have already been significantly delayed and compromises are understood to be under discussion. Clarification of their current status and next steps is expected in the next few weeks. While many are hoping that this will mean the end of the proposals, Wolfgang Schaeuble is reportedly attempting to put an FTT proposal on the OECD's agenda. It seems unlikely that the OECD would adopt FTT proposals unless they are significantly different to the original EU proposals, given that nearly two thirds of EU jurisdictions are not persuaded of their viability. However, if the OECD were to pick it up the UK would again be potentially affected for a reason largely unconnected with Brexit.
