Digby Jones, the director-general of the Confederation of British Industry,revealed the plan just days after a partial government climbdown on unpopularBudget proposals to clampdown on multinationals using offshore mixersubsidiaries to channel overseas profits.
Mixers allow UK multinationals to minimise their tax bill by off-setting profitsfrom high-tax regimes against those from low-tax regimes.
The Inland Revenue on Friday announced that UK multinationals would be allowedto move mixers onshore, but only foreign tax rates of 45% or less would beeligible.
Jones and UK business leaders believe the Treasury compromise will still costbig business millions and that the 45% cap compares badly with Japan’s 48% capand a 78% cap in Norway for oil taxes.
‘We don’t consider this a done deal,’ he said. ‘We will be lobbying to get thecap to over 50% cent.’
Tax experts last week highlighted that the 45% cap would hit multinationals withsubsidiaries based in New York City whose federal, state and city tax rates,plus withholding tax on dividends, would bring them above the threshold.
The Treasury said it was satisfied with the limit, but it was happy to engage infurther talks with the CBI.
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