Moves will create about 2,000 highly-paid jobs, John Dixon tells FT
At least 20 multinationals are planning to move their regional or global headquarters to the UK over the next year, Ernst & Young has told the Financial Times.
The ‘big four’ firm said the UK was now ‘successfully competing with low-tax countries such as Switzerland and Singapore as a base for multinational companies’, and told the FT that the 20 planned moves would ‘create about 2,000 highly-paid jobs and generate several hundred millions of pounds of extra corporate, employment and consumption tax revenues’.
The paper quoted the firm’s head of UK tax, John Dixon, as saying that publicly-announced global HQ moves, often involving relocation of a small number of senior executives, were ‘the tip of the iceberg’. ‘Many more’ jobs were created by companies moving their regional headquarters.
Dixon said the UK business tax regime was now ‘fully competitive’ when benchmarked against other countries, the FT’s Vanessa Houlder reported. This was the result of ‘a planned cut in the corporate tax rate to 22% in [April 2014], a new tax break for patent income, new rules on foreign profits and tax-deductible interest costs’.
Critics have warned that planned changes to the UK’s controlled foreign companies rules will come at a cost to developing countries seeking to protect their tax bases from avoidance by means of tax havens, and that tax relief for interest paid by UK companies is a feature of aggressive tax planning by some multinationals.
Martin Wolf, the FT’s chief economics commentator, warned in March that ‘zero-sum competition’ among governments to attract mobile headquarters ‘cannot make sense’. Responding to the Budget, Wolf said the reduction in corporate tax would ‘encourage retentions over distributions, while doing nothing to raise investment’.
Tax competitiveness – what our ‘one minute’ interviewees said
‘We’re much improved on the corporate tax front. The new CFC code is a long piece of work, but corporates can live with it. There are, however, a number of hurdles that have to be cleared before a UK subsidiary paying interest to a related overseas lender can be sure it’s got tax relief. There is no really certain safe harbour under any of it, and with arbitrage and the worldwide debt cap, it’s really quite a process. If you’re explaining that to someone who’s wondering where to locate their new subsidiary, this is an irritating chunk of the tax code and not competitive.’
Colin Hargreaves, head of tax, Freshfields Bruckhaus Deringer, 7 June 2012
‘I think the Chancellor's been doing a very good job in trying to make the UK more competitive. But it is now time to take stock, consolidate and simplify.’
‘The probability of a significant number of the FTSE 350 rebasing themselves overseas was very high two years ago, but recent announcements appear to have stemmed the tide.’
Simon Nuttall, head of tax at Bodycote plc, 1 February 2012
‘We definitely are [moving in the right direction], and for corporate tax at least we probably do not need to move too much further (once we sort out the CFC rules). The UK is not a tax haven and it never will be – it has so much more to offer. What we need is a tax system that is not a disincentive to base yourself here, and we are getting much closer to getting the balance right.’
Sara Luder, head of tax, Slaughter and May, 28 September 2011
Moves will create about 2,000 highly-paid jobs, John Dixon tells FT
At least 20 multinationals are planning to move their regional or global headquarters to the UK over the next year, Ernst & Young has told the Financial Times.
The ‘big four’ firm said the UK was now ‘successfully competing with low-tax countries such as Switzerland and Singapore as a base for multinational companies’, and told the FT that the 20 planned moves would ‘create about 2,000 highly-paid jobs and generate several hundred millions of pounds of extra corporate, employment and consumption tax revenues’.
The paper quoted the firm’s head of UK tax, John Dixon, as saying that publicly-announced global HQ moves, often involving relocation of a small number of senior executives, were ‘the tip of the iceberg’. ‘Many more’ jobs were created by companies moving their regional headquarters.
Dixon said the UK business tax regime was now ‘fully competitive’ when benchmarked against other countries, the FT’s Vanessa Houlder reported. This was the result of ‘a planned cut in the corporate tax rate to 22% in [April 2014], a new tax break for patent income, new rules on foreign profits and tax-deductible interest costs’.
Critics have warned that planned changes to the UK’s controlled foreign companies rules will come at a cost to developing countries seeking to protect their tax bases from avoidance by means of tax havens, and that tax relief for interest paid by UK companies is a feature of aggressive tax planning by some multinationals.
Martin Wolf, the FT’s chief economics commentator, warned in March that ‘zero-sum competition’ among governments to attract mobile headquarters ‘cannot make sense’. Responding to the Budget, Wolf said the reduction in corporate tax would ‘encourage retentions over distributions, while doing nothing to raise investment’.
Tax competitiveness – what our ‘one minute’ interviewees said
‘We’re much improved on the corporate tax front. The new CFC code is a long piece of work, but corporates can live with it. There are, however, a number of hurdles that have to be cleared before a UK subsidiary paying interest to a related overseas lender can be sure it’s got tax relief. There is no really certain safe harbour under any of it, and with arbitrage and the worldwide debt cap, it’s really quite a process. If you’re explaining that to someone who’s wondering where to locate their new subsidiary, this is an irritating chunk of the tax code and not competitive.’
Colin Hargreaves, head of tax, Freshfields Bruckhaus Deringer, 7 June 2012
‘I think the Chancellor's been doing a very good job in trying to make the UK more competitive. But it is now time to take stock, consolidate and simplify.’
‘The probability of a significant number of the FTSE 350 rebasing themselves overseas was very high two years ago, but recent announcements appear to have stemmed the tide.’
Simon Nuttall, head of tax at Bodycote plc, 1 February 2012
‘We definitely are [moving in the right direction], and for corporate tax at least we probably do not need to move too much further (once we sort out the CFC rules). The UK is not a tax haven and it never will be – it has so much more to offer. What we need is a tax system that is not a disincentive to base yourself here, and we are getting much closer to getting the balance right.’
Sara Luder, head of tax, Slaughter and May, 28 September 2011
