HMRC has confirmed that the UK is set to lose approximately £600 million in tax revenue each year due to a deal that exempts the US from a global minimum tax commitment. The revelation came during a review by Parliament's Public Accounts Committee (PAC) into taxes paid by large multinational companies in the UK.
Global Tax Deal and US Exemption
A landmark international tax agreement was reached in January, with 150 countries committing to a 15% global minimum tax aimed at preventing large multinationals from shifting profits to lower-tax jurisdictions. However, the US secured an exemption from the deal, which was finalised by the Organisation for Economic Co-operation and Development (OECD).
Nicole Newbury, director of large business compliance at HMRC, told the committee: “It has reduced the benefit – the additional tax that will be paid in the UK – by about £600 million a year. The forecast for what Pillar 2 will bring into the UK has now reduced to £1.6 billion a year, so there will be a monetary impact.”
PAC Warns of Profit Diversion Risks
The PAC has warned that HMRC must better address the significant risk of global firms diverting their profits overseas. While the committee found HMRC’s approach to collecting tax from large businesses is “generally working well,” it noted “significantly high” risks related to multinationals potentially shifting profits across borders.
Of the £70.1 billion in tax under consideration in 2025 as part of investigations into large businesses, HMRC estimates that around £21 billion faces international risks. The committee is calling on HMRC to provide further insights into these risks and how it can better tackle potential issues.
MPs Call for Action
Clive Betts MP, deputy chairman of the committee, said: “The UK still risks bleeding a significant amount of its tax take overseas through the cross-border diversion of multinationals’ profits over borders. HMRC should be bearing down on work to understand how companies are complying with new rules on international minimum rates for corporation tax, particularly in light of the parallel agreement with the US exempting their own companies from these rules.”
