IMPENDING changes to the way international companies pay tax could undermine government efforts to improve Britain’s tax competitiveness, research by EY has found.
The survey of finance and tax professionals found that most businesses (68%) believe the UK’s tax system has become more competitive over the last five years, and that the lower rate of corporation factor was a key factor. Reform of the Controlled Foreign Companies regime changes to the patent box and research & development relief were also repeatedly listed as key reasons driving improved competitiveness of the UK.
However, the survey of 130 business leaders – 60% of which were CFO’s, heads of tax or tax directors – found concerns that uncertainty over the implementation of the diverted profits tax (DPT) and the risk of kneejerk reactions arising out of the fair tax debate are undermining the UK’s position in a global economy.
“While the business community now knows that the DPT is here to stay, the lack of detail surrounding its implementation seems to be raising red flags and risks threatening the UK’s competitiveness,” said Chris Sanger, head of tax policy at EY.
Accelerating growth and enabling job creation should be the key drivers behind the chancellor’s future tax policy choices according to 76% of respondents. The survey also suggested that the George Osborne should focus on ensuring fairness in the tax system.