CBI calls for tax rethink to stop multi-national exodus

The UK government should overhaul its tax regime to stop more multi-nationals
following United Business Media’s decision to switch tax residency to Ireland,
urges the Confederation of British Industry.

The employer’s body argues the system is in need of a radical change if the
UK wants to remain the local of choice for controlled foreign companies.

Richard Lambert, CBI director general, said: ‘Firms are seriously concerned
about the high level and rising complexity of taxation in the UK and are
increasingly prepared to vote with their feet. The Treasury cannot ignore this
issue or argue that companies are crying wolf.

‘The prime issue in this case is the complex UK practice of taxing profits
earned abroad once they are remitted to the UK, raising the potential for double
taxation. This makes the UK less attractive to internationally-mobile firms such
as UBM.’

An analysis of the UK’s corporate tax regime, published by the CBI last
month, calls on the government plays a leading role in EU and Organisation for
Economic Co-ordination and Development discussions on further coordination of
national tax systems.

According to the World Economic Forum, the UK has slipped from 4th place in
1998 to 15th in 2003 on the Global Competitiveness Index.

While the UK’s marginal corporation tax rate was third lowest in the EU in
1997, it is now the sixth highest and the effective average corporation tax rate
is the eighth highest in the OECD.

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