UK is “Top of the List” for doing business

The overhaul of the UK’s corporation tax regime is making the UK a very attractive place for multinationals to do business, with hundreds of them lining up to establish operations here.

David Gauke, Exchequer Secretary to the Treasury, said at the weekend that the UK is now “top of the list” for big investments from multinational firms, adding that, a few years ago, it was not even making the shortlist, but now there is the increasing sense that it is as competitive and attractive as other jurisdictions.

Last month, Mr Gauke led a British mission to the US to drum up investment from big multinationals and touted the UK’s new corporation tax regime as its big selling point.

The corporation tax rate falls to 20 per cent next year, making it the joint-lowest rates in the G20, and the “patent box” package of tax incentives, which attributes a 10 per cent corporation tax rate to the profits earned on products patented in the UK, is also seen as giving it the edge for some types of investment.

Changes to controlled foreign companies (CFC) rules, which came into effect last year, have become the cornerstone of the Government’s ambition to have the most competitive tax system in the G20.

Under old CFC rules, all profits of foreign subsidiaries were potentially subject to a charge on the difference between the tax it paid in any low tax regime and the UK rate but, under the new system, only UK-generated income is taxed here, with a charge only arising on the proportion of overseas profits that are “artificially diverted” from the UK.

Meanwhile, a recent survey has revealed that half the companies looking to locate operations in the UK want to base themselves outside London and more than a fifth of them are in the manufacturing or industrial sectors, which will help to rebalance the economy.