Brown to offer foreign subsidiary tax breaks
Chancellor expected to ease foreign profit taxation for UK businesses with overseas subsidiaries
Gordon
Brown is this week expected to announce that UK businesses with
foreign subsidiaries will no longer have to pay a levy on profits returned to
Britain from foreign operations.
The Times
reports that Brown will make the announcement in his last Mansion House
speech as chancellor. The Treasury has been consulting on this issue, and
Brown’s successor as chancellor is expected take further action on the matter in
the pre-Budget report or the Budget.
Under the current system UK companies with operations in countries with low
tax rates have to pay a ‘top-up’ charge on foreign earnings they repatriate to
the UK.
Chris Sanger from Ernst & Young said the UK may follow the Netherlands
and introduce a ‘participation exemption’ that would scrap any additional
taxation on foreign profits.
Further reading:
Read about the ECJ cases that have influenced Brown’s
decision