Treasury’s corporate tax consultation due today

An overhaul of corporate tax that will see inbound dividends exempted from
tax, as well as some restriction on interest relief, is set to be released

The consultation was set to be formally announced by Gordon Brown last night
in his last Mansion House speech as chancellor. The actual consultation document
is due to be released today.

The document should outline how the Treasury plans to react to various
European Court of Justice rulings on the taxation of controlled-foreign
companies and foreign company dividends. The cases were brought by up to 1,000
multi-nationals, including Pepsi.

The challenge for the Treasury will be how to make up for the loss of tax
revenues from CFCs and foreign income. Limiting interest relief has been cited
as one solution, but this could harm the UK’s commercial attractiveness

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