In the tax season of 2021, there are some significant differences between the taxes levied by American companies and those of UK companies. Since the UK has a lower tax rate than the United States, the combined effect of the two economies can be very powerful. This is especially true in some states like Tennessee, where corporate taxes are much lower than taxes on personal income. Similarly, many business owners do not want to pay taxes on income from home in the US when they may only owe taxes on that income in the UK. For this reason, the demand for tax accountants and online tax advisors with UK-based accreditation is very high this tax season.
European Union’s Leaders
The European Union’s leaders recently reorganized the European Union’s tax powers to revive the ailing economy. A recent study showed that nearly one in four companies in the UK have zero-tax jurisdiction. However, many UK tax companies operate under the umbrella of the ERIC, or internal resolution companies. ERICs are responsible for resolving internal resolution conflicts and administrative disputes involving royalty payments, contract disputes, and procurement. These companies also act as third-party consultants for tax collection and implementing policies agreed upon by the parent company. ERICs usually have arrangements with the parent company to carry out their responsibilities.
Multinational Corporations to Reduce their Tax Burden
The United States has been pushing the European Union to open up its internal taxation system to allow multinational corporations to reduce their tax burden. President Trump’s commerce secretary, Ross, has convinced the European Union to loosen its belt and allow multinational corporations to reduce their tax burden. His main argument is that the UK has more economic strength than the EU because it is a more mature and stable country. In addition, the UK has the backing of a decisive Remain vote among the EU member states. These arguments have not been very compelling so far, and it appears that the new tariffs will push the issue further down the agenda.
Increased Unemployment Level
The United Kingdom and the EU are now in a state of limbo. The UK is concerned that the loss of the manufacturing base in the UK will lead to an increased unemployment level. On the other hand, the European Union is afraid that a British exit from the European Union would withdraw its market power from the entire European continent. If this happens, the EU will be brought to its knees. The future of the trade war is therefore in doubt.
Global Equities
On the other hand, the global equities are not as worried about the tariffs. There is an expectation that the tariffs will only be minor adjustments, enough for the British government to conduct a post-surge exercise to deal with the upcoming recession. The European Commission has already stated that there will be no restrictions on cars and motorbikes in the UK during the current recession.
European Commission
This means that the investors who do not want a trade war are looking for a sign from the European Commission or the United States to indicate that they will not implement any trade-restrictive measures in the coming years. However, the European Commission has already stated that it will not bring up the issue of restrictive measures or a reduction in the quota during the current recession. There is, therefore, no chance of a hike in the yield curve anytime in the next two to four years.
The Tariffs
As the global equities recession persists, the tariffs will keep going up until the end of the year. It will be beneficial for the British exporters rather than the European Union and the United States in the long run. The British will continue enjoying its cheap exports, while the EU and the United States will suffer a severe dent in their economy. It is believed that the European Union may even suffer a complete collapse in the years to come if the economies of many member states fail to regain their footing from the recent global economic slowdown.
Conclusion
For the moment, the political rhetoric is relatively high with all countries involved in the global trade war. The European Union is feeling pressure from the United States while Mr. Cameron is looking for a way out of his troubled negotiations with the EU. On the other hand, the Chinese are also feeling the heat as they have made several mistakes in the past and need some time to sort out their trade policies. It is hard to predict where the global trade war will lead and affect the global economy. However, it is safe to say that tariffs will increase instead of decrease as the UK tax exporters need to start producing more goods in the Global North to secure their markets.
