THE COMPETITIVENESS of the UK tax system has improved the most out of all major economies in the last two years, according to a KPMG survey.
The study assessed all business taxes in 14 countries, building on data compiled for ten nations in 2010.
The taxes analysed included corporate income taxes, capital taxes, sales taxes, property taxes and statutory labour costs, which were added together to give a total tax cost. That cost was compared between countries and cities using a total tax index – a measure of the total taxes paid by a business in a particular location, expressed as a percentage of total taxes paid by corporations in the US.
The UK was the most improved, climbing to sixth and dropping almost 15 percentage points in its total tax index, from 88 to 73.3. Only India, Canada, China, Mexico and Russia were more competitive.
It was also the top European nation analysed, while Manchester was more attractive than London from a tax perspective – primarily due to lower labour and property costs leading to reduced tax bills.
KPMG’s UK head of tax policy Chris Morgan said: “This is good news for UK plc and an endorsement of the government’s tax policy. The significant change for the better is partly due to reductions in the corporate income tax rate here in the UK [which has reduced 2% since 2010]. It is also due to lower industrial property values in 2012 which have resulted in a reduced burden for other corporate taxes.”
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