Corporation tax to receive potential overhaul

News Article - 10 January 2007
Category: Business

Corporation tax on foreign dividends may have to be overhauled by the Treasury after experts warned that outside investors are favouring countries with more lenient tax regimes.

A number of multinationals have relocated to areas outside of the UK, putting pressure on the chancellor, Gordon Brown, to rethink policies on the levy, which sees companies taxed on their worldwide profits, the Times reports.

"I think they will have to look at taxing foreign profits. If a foreign company asked a tax advisor where it should locate in Europe, I don't think he would recommend the UK as a first choice," Ian Brimicombe, head of tax at AstraZeneca, told the publication.

He added that the likely recommendations would be Luxembourg, Holland or Ireland.

KPMG's head of international corporate tax, Chris Morgan, advised foreign businesses looking to find the best tax base to avoid the UK.

The tax rates have risen for some companies because of the "tightening of anti-avoidance rules", he said.

Meanwhile, in France, president Jacques Chirac recently said he predicted a cut in the country's tax rate which would lower it to 20 per cent over the next five years.

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