The competition between governments to attract businesses has driven down business tax rates in a number of countries, and intensified the pressure to increase rates for individuals.
The average corporation tax in the world’s 30 richest countries fell from 37.5% in 1996 to 30.8% in 2003.
Loughlin Hickey, KPMG’s UK head of tax, said: ‘Whilst the figures show the UK’s corporate tax rate is at a respectable 30%, this is only just below the EU and OECD average.’
He added that there is increasing competition from the Netherlands, Belgium and Ireland for corporate headquartering and said tax reform had to be handled carefully in case it diminished the UK’s competitiveness.
The pressure on UK-based companies will be increased by Gordon Brown’s aggressive anti-tax avoidance measures.
John Battersby, head of strategic tax policy at KPMG, said: ‘Mr Brown’s efforts to extract more from companies may not be sustainable.’
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