UK will lose world-leading corporation tax status with impending hike, study finds
The UK’s corporation tax rate has remained at a historic low of 19% since 2017, making it the world’s sixth lowest. But a 6% hike, announced during the 2021 Spring Budget and set to take effect in 2023, will see the UK drop to being the twenty-first lowest, and just below the global average.
UK Tax experts believe that the impending rise means that many international companies which previously saw the UK as an attractive place to do business may now question whether there are better opportunities and more favourable tax rates on the continent.
For years, the UK has been known as an established locale for international business, and these upcoming tax hikes may lead investors to question the UK as a place to set up shop and the UK’s “dramatic” increase will likely set a global precedent and cause other jurisdictions to follow suit.
Notably, the rise in corporate tax will only apply to the UK’s most profitable businesses. From April 2023, companies with profits under £50,000 will continue to pay a corporation tax rate of 19%, and a tapered rate will be put in place for companies with profits between £50,000 and £250,000.
Global minimum corporation tax rate
Research also notes the potential influence of the global minimum corporation tax rate established by the Organisation for Economic Cooperation and Development (OECD), arguing that it could prevent future cuts.
The OECD announced in October that 136 countries have signed up to a deal to enforce a minimum corporation tax rate of 15% from 2023. The deal will also allow countries to tax multinationals that make sales within their jurisdictions even if they do not have a physical presence there.
As a result of growing political pressure, some lower tax jurisdictions will likely now have to increase their corporate tax rates for multinationals. Countries such as the Republic of Ireland have come under fire for their low corporate tax rate of 12.5%.
Large corporations are a key target for government clampdowns worldwide, with some multinationals choosing to operate from lower tax countries, resulting in them recording lower profits in countries with higher tax rates.
call our team on 0203 488 7503, 01992 236 110
or contact us by email at firstname.lastname@example.org
or via our website www.walshwestcca.com