Clients often complain to me about the amount of corporation tax that they pay says Phil Harris of Harris & Co accountants Northampton, even though the rate of tax is now 20% for small companies. The tax rate for large companies is even coming down to 20%.
Our corporate tax rates are relatively low compared to many of our main economic rivals. These relatively low rates are driving a couple of the recent mega deals.
Walgreens, the American drug store giant, is examining a £10.5b offer for Boots the Chemists. Part of their plan is to then relocate their head office to the UK and pay 20% UK tax rather than the 37.5% that they currently pay in the USA.
The other big deal in the news is Pfizer’s offer for Astra Zeneca. What many people don’t realise is that Pfizer has $57b of cash that it cannot repatriate to the USA without triggering a massive USA deal. It makes sense for Pfizer to use the cash to buy Astra Zeneca rather than send it back to the USA and pay punitive taxes. Experts also reckon Pfixer could save $1b in taxes each year by moving to the UK.
I bet you never though of the UK as a corporate tax haven!