A typical corporate and investment bank would pay a higher effective tax rate in London — of just over half its profits —compared to five global financial centers that include Frankfurt, New York, Dubai and Singapore, a new study commissioned by industry body U.K. Finance showed.
Conducted by PwC, the analysis revealed such a bank would pay 50.6% of total profits in tax compared to Frankfurt where a corporate and investment bank would pay 43.8%, New York (34.2%), Singapore (23.2%) and Dubai (22.7%).
The study also found that, overall, U.K. banks paid the equivalent of 50.4% of their total profit in taxes in the 2017-2018 tax year. This represented £1 out of every £8 paid in corporation tax in the U.K.
The banking sector's tax contributions to the fiscus rose by £1.3 billion to a total of £36.7 billion in the year up to March.
The sector's total revenue raised by corporation tax, including banking surcharge, increased by 13.6% since 2017 and is 4x higher than it was in 2014 despite the main corporation tax rate falling in the country during that period.
The banking sector's total public finance contribution has grown by £5.4 billion since 2014, mainly due to the taxes specific to the sector, like the banking surcharge and the bank levy which respectively raised £1.8 billion and £2.8 billion during the 2017-2018 tax year.