UK found to be the most attractive tax systemCurrent affairs
The annual “Senior Tax Decision Poll” by accounting firm Klynveld Peat Marwick Goerdeler (KPMG) has found that the UK has the most attractive tax system in the G20, surpassing liberal tax regimes such as Ireland, Luxemburg and Switzerland.
The survey by KPMG, which interviewed 57 senior tax executives of FTSE 100 and FTSE 250 companies, marks a move from an opinion from 27% to 72% of companies who named Britain as the leading tax regime.
The findings highlight the dramatic 7% cut in the UK tax system over the period from 2008 to 2014, when corporate tax will be set at 21%. Last year the UK was voted fifth in the poll, but this year the UK holds the lowest tax rate in the western world.
In response to the findings, Chancellor George Osborne said: “These companies can choose to invest and create jobs anywhere but are increasingly choosing Britain and showing that Britain can compete in the global race”.
Chris Morgan, head of tax policy at KPMG, added: “When asked what single measure in the UK tax or regulatory regime the government should introduce over the next 12 months, tax relief on infrastructure or capital investments was the stand out leader in terms of what was suggested.
“And our survey suggests that such a move would have a real and lasting impact on jobs and capital investment in the country; precisely what is needed to get the growth we so urgently need”.
Areas that were found wanting by all of the 57 companies were infrastructure and capital investment tax breaks which, if made more attractive, could increase investment by 12%, research and development by 17% and the workforce by 6-7% consisting of “tens of thousands of jobs” according to KPMG.
Mr Morgan added: “It’s extremely difficult to quantify what the impact of these measures might be. However, if we applied the 15 percent highest headcount increase suggested by our FTSE 100 respondents across the 2.1 million people employed by this group as a whole, it would suggest 300,000 extra jobs.
“That precise number is likely to be a bit of a stretch but it does seem feasible that a major boost to capital investment on infrastructure could be a fillip to employment and thus be a driver of growth”.