US threatens to double tax rates on UK firms under obscure 91-year-old rule

The Trump administration is actively contemplating invoking Section 891 of the US Internal Revenue Code, a rarely employed tax regulation, to escalate trade disputes with the UK. This rule could impose higher tax rates on British firms operating in the US if the UK is seen as discriminating against American businesses. Tax experts warn that this could have a more damaging effect compared to existing tariffs, particularly affecting UK service sectors and large US tech companies targeted by UK's Digital Services Tax.

The White House's concerns center on UK tax policies perceived as discriminatory against American firms, particularly large tech companies. The UK's Digital Services Tax targets these firms.

Experts warn that using Section 891 to double tax rates on British firms could have a more severe impact than tariffs, affecting UK service transactions significantly.

Read at Business Matters