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UK second to Ireland in tax competitiveness but Brexit increases likelihood of businesses moving functions out of the UK


Added on 15/05/2018

 

(City A.M.) -- The UK has the second-most attractive tax regime after Ireland, according to new research by big four accountant KPMG.

The survey of decision makers at 77 of the UK’s largest listed companies and 58 non-UK companies found that while perception of the attractiveness of the UK’s tax regime had weakened slightly it was still the second-most attractive tax regime after Ireland.

Half of all respondents named the UK as one of the three most competitive tax systems in the world, second to Ireland which was identified by more than three in five of those interviewed.

However, the gap between the two nations had narrowed from 15 percentage points to 12 since the previous year.

The proportion of UK companies committed to keeping their tax residency in the UK was at an all-time high.

More than three-quarters said they had no plans to move their tax residency, the highest proportion since the study began 12 years ago.

However, the number of companies that said Brexit had made them more likely to move their tax residency increased from two per cent to 10 per cent.

The survey also showed a net balance of firms looking to move certain business activities out of the UK including finance, group services, manufacturing and regional head office.

Melissa Geiger, head of international tax at KPMG UK, said: “Businesses look for stability and predictability from tax regimes, not just attractive rates. The UK has largely maintained a business-friendly tax regime compared to many of its rivals. This survey shows that once a business starts operating in the UK, they tend to recognise the attractiveness of the country’s economic and tax environment and are likely to keep their base here.”

James Stewart, vice chair and head of Brexit at KPMG, said: “Without doubt Brexit brings an element of uncertainty to the current economic outlook which is challenging the UK’s reputation for a strong, resilient and attractive location for investment. Many firms are waiting to see how Brexit negotiations progress before making a firm decision.”

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