Osborne to lure investors with sub-15% corporation tax
George Osborne is planning to cut the UK’s corporation tax to less than 15% in an effort to encourage businesses to still invest in the UK following the EU referendum vote. Mr Osborne said it was important for Britain to "get on with it" to prove to investors that the country was still "open for business". He added that he wanted a leading role in determining the future of Britain’s economy, which he says should be “super competitive”. However, the head of tax at the OECD warned that more aggressive tax offers post-Brexit may “turn the UK into a tax haven type of economy”. Pascal Saint-Amans said there may also be “practical and domestic political barriers to doing this.” Outside the EU, the UK could selectively offer foreign investors one-off tax deals – something prohibited by EU law. Chas Roy-Chowdhury, head of taxation at ACCA, agreed with the OECD analysis. "Any tax policy will be closely aligned with what the EU does because that will create much greater certainty for businesses. So while the Brexiteers may be talking about all this autonomy, I think the reality is there will be very close alignment with the EU,” he said. However, in a separate memo, the OECD did concede that unfettered from EU VAT rules, the UK could “remove the VAT burden on its financial services industry, which would create a major competitive advantage for the City compared to other financial centres in the EU.” George Osborne’s tax proposal is part of a five-point plan which includes a new push for investment from China; ensuring support for bank lending; redoubling efforts to invest in the Northern Powerhouse; and maintaining the UK’s fiscal credibility.
Source: BBC News (04/07/2016)