16/03/17

U.K.'s Corporate Tax Allure Outweighs Brexit Concerns, CEO Says

The U.K. is gaining allure as a head-office location for international companies as government plans to lower corporation tax outweigh Brexit concerns, according to the founder and chief executive of staffing and outsourcing business Robert Walters Plc, reports Bloomberg.

“You’ve got reducing corporation tax, you’ve got a well-educated workforce, you’ve got benign employment law, a devalued currency -- why wouldn’t you be based in the U.K.?” Robert Walters said in an interview Wednesday.

While much of the post-Brexit debate has centered on whether financial companies will consider leaving London, the government sees lowering costs as key to ensuring large firms remain. In last week’s spring budget, Chancellor of the Exchequer Philip Hammond affirmed a commitment to lower corporation-tax rates from 20 percent to 17 percent by 2020.

The government’s stance has drawn the irk of the European Union, which fears Britain being a tax haven on the bloc’s perimeter. McDonald’s Corp. announced plans to move its non-U.S. tax base to the U.K. from Luxembourg last August.

Robert Walters, which derives 31 percent of gross profit from the U.K., reported revenue of 999 million pounds ($1.2 billion) for 2016, a 23 percent increase from the year before. Pretax profit of 28.1 million pounds beat the average analyst estimate of 26.4 million pounds. The shares rose as much as 3.8 percent in London.

While confidence levels were “negatively impacted” by the runup to and fallout from the Brexit vote, the business won a number of large new client accounts and had “excellent” growth in its outsourcing division, it said.

“I don’t think it’s doom and gloom by any means,” said Walters, who has led the company since founding it in 1985.