THE US ADMINISTRATION has produced plans to lower corporate tax while eliminating tax breaks and loopholes.
President Barack Obama set out his budget proposals with a promise to reform a corporate tax rate of 35% that “makes our businesses and economy less competitive as a whole”. This would be funded by reducing certain tax breaks enjoyed by, among others, the oil and gas sectors.
However, the implications for UK businesses will only become clear once more detail has been added, tax experts have said.
Bill Dodwell, head of tax policy at Deloitte, said there was no timescale on these plans yet, which means they remain “an aspiration”.
“Given that the US is still the biggest investment location for the UK, we will be hugely interested in what these reforms will do, even if we don’t have the same level of influence as we would like,” he added. “It’s all deferred. But it is definitely something that UK companies will be keeping an eye on.”
Mike Warburton, tax partner at Grant Thornton, said that these proposals were indicative of moves around the world to reduce corporate rates and remove reliefs.
“If you can do away with the reliefs and finish up with a lower headline rate, it is easier for multinational businesses to look around the globe and think where to invest – invest where the tax rates are lowest. Then they look at the 24% at the UK, and the US does not look so favourable,” he said.
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