THE global accountancy network, MGI Worldwide, has asked for the UK and other countries to introduce small company corporation taxes.
MGI Worldwide, the top 20 international accounting network, carried out research showing that the UK, US, Germany, Russia and Italy impose the same corporation tax rates as for multinational companies. MGI claims ten of the G20 leading economies do not implement lower corporation tax rates for all smaller businesses and that they are failing start-ups.
The UK has gradually lowered the main rate since 2011 to bring it in line with the small profits rate. Corporation Tax is now levied at 20% with further reductions planned. MGI says that the UK’s policy of reducing corporation tax rates across the board is welcome, however, small businesses require greater incentives than large corporates if they are to gain growth in the economy, ambitious strategies, business expansion, job creation and reinvesting.
Clive Bennett, CEO of MGI Worldwide said: “countries risk putting themselves at a significant disadvantage by failing to reduce the corporate tax burden. Nurturing the start-up economy is vital. Higher taxes can stifle entrepreneurship and growth.”
For the half of G20 economies that do offer lower main corporation tax rates for small companies, the average discount is 10.3%. Global economies should introduce the smaller tax, such as Brazil, Canada, France and India have done, to boost their start up and enterprise economies. MGI explains that reducing tax rates for small businesses can incentivise economic growth, considering small businesses are hit the hardest in bank lending and many struggle in development expansion investing.
MGI adds that some countries with lower tax regimes could go further as in France the tax rate for small businesses is 15% compared to 33.3% for other businesses, however, it only benefits micro companies with taxable profits up to €38,120 (£31,900). Canada has lowered corporation tax rates for small businesses over the past decade, which has boosted economic development during a low growth period after the financial crisis. Canada levies just 15% corporation tax on small businesses compared to 26.5% for other businesses.
Bennett said: “SMEs suffered most during the recession and they continue to suffer in bank lending. It’s therefore vital that governments give them extra help to put them on to a more level playing field with their better-resourced larger rivals.”
Committee expresses concern about costs to businesses and April 2018 implementation date
Andrew Tyrie airs views on the Finance Bill, 'Making Tax Policy Better' report, and Brexit
Top 25 firm HW Fisher & Co has acquired London firm Rhodes & Rhodes
Top Ten firm RSM has appointed Nick Blundell as its head of corporate tax in Birmingham