The City of London is expected to receive an exemption from new global proposals to tax multinational corporations, benefiting the Square Mile’s largest banks.
The FT reported that the UK’s pitch to spin off the financial services sector was accepted in ongoing talks at the OECD in Paris.
However, sources said the UK would need to get rid of its digital services tax in order to offset the exemption.
Many large banks are based in the city, but generate more than half of their income elsewhere.
HSBC, for example, generates more than half of its revenue from China, but is the UK’s largest bank by revenue.
Earlier this month it was reported that Chancellor Rishi Sunak would use the Paris talks to push for a spin-off of the Square Mile.
The FT said the exemption was agreed in the first part of talks, in which the OECD countries try to define where the largest multinationals should pay taxes.
In the second half of the negotiations, an attempt will be made to agree on a worldwide minimum tax rate of at least 15 percent.
One such deal aims to end what US Treasury Secretary Janet Yellen called a “30-year race to the bottom on corporate tax rates” as countries compete to attract multinational corporations.