Cut in Corporation Tax in the UK
The Chancellor of the Exchequer in the UK, George Osborne
has delivered an Autumn statement announcing a further 1% cut in corporation
tax in 2014 which will bring the rate down to just 21%. When compared to recent levy’s in the US –
40%, France – 33% and Germany 29%, this will make the UK the lowest rate of any
major western economy.
Mr Osborne had announced earlier in the year that this would
be cut from 24% to 22% by April 2014 it may seem that as corporation tax has
become a bigger issue in the UK in recent months due to the publicity corporate giants such as Starbucks, Google and
Amazon have received a bad press over
the amount of tax they have paid in the UK. This may have impacted on his decision to cut
the rate lower than previously advised bringing this into line with Luxembourg
who also charge 21% whose tax regime was favored by these corporate entities
over Britain’s. The message is very
clear from Mr Osborne that this cut is to promote investment into the UK.
As well as Luxembourg, Ireland and Bermuda were also citedas jurisdictions that were receiving the majority of the profits from large
corporations due to their favorable tax regime with Ireland at just 12.5% and
Bermuda with no corporation tax. Ireland
has come under increasing pressure from EU politicians regarding their low rate
of corporation tax, but in a recent budget speech Finance Minister Michael
Noonan has reiterated that the Irish government’s intension is to maintain that
So the UK may now be the lowest rate of any major western
economy, but there are many jurisdictions around with much lower corporate tax
rates so it will be interesting to see if this cut will bring the investment
that Mr Osborne hopes.
Corporation tax is just one of the various aspects to take
into consideration when incorporating an offshore company. If you would like to hear more regarding this
and other considerations please do not hesitate to contact us.
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