The Government has
today published details of its Corporate Tax Reform programme
consisting of a series of essential reforms designed to improve
the UK's tax competitiveness. Measures include the
introduction of new Controlled Foreign Company (CFC) rules and a
commitment to introduce a Patent Box.
The Government wants Britain to be a place for businesses to
invest. That is why the June Budget announced the reduction of
Corporation Tax for large and small businesses with a cut in the
main rate from 28% to 24% over the next 4 years and a reduction in
the small profits rate from 21% to 20% from April 2011.
However, the Government recognises that a competitive corporate
tax system is not just about rates. That is why the Government has
published the document 'Corporate Tax Reform: delivering
a more competitive system'. This document is designed to
provide certainty to business over the Government's
plans, as it works with them to deliver this ambitious programme
of reforms.
Today's tax reform announcements include:
* a
Corporate Tax Road Map that commits to principles that will
underpin these reforms and a clear timetable to deliver these
changes, including how the Government will engage with business at
each stage of policy development;
* details on how the Government will reform the UK's
outdated Controlled Foreign Company (CFC) rules by introducing
more targeted rules in 2012 and how they will apply to financing
and intellectual property. As a first step to make the rules more
competitive, a package of interim improvements will be introduced
in 2011;
* introducing a Patent Box in April 2013 - a 10% CT rate on
profits from patents, reaffirming the Government's
commitment to retain and build on the existing Research and
Development (R&D) tax credit scheme to create the right
environment for innovative companies to prosper
* a commitment to legislate an opt-in exemption for profits
earned in foreign branches of UK companies in 2011. Under this
more territorial approach, companies in the new regime will no
longer be subject to UK CT on their foreign branch profits.
This programme demonstrates the Government's commitment
to a competitive and stable tax system which provides business
with the confidence to expand and invest in the UK in the years ahead.
The Exchequer Secretary to the Treasury, David Gauke MP said:
"In recent years, too many businesses have left the UK
amid concerns over tax competitiveness. It's time to
reverse this trend. Our tax system was once viewed as an asset.
And it needs to be an asset again.
"That is why the Government is prioritising corporate
tax reform. Responding to the concerns of business, the UK is
headed for a more competitive, simpler, and more stable tax system
in the future, creating the right conditions for investment"
Notes for Editors
1. The document published today can be accessed on the HMT
Corporate Tax Reform website: http://www.hm-treasury.gov.uk/corporate_tax_reform.htm.
2. Details on the CFC consultation that the Government committed
to at the June Budget, can be accessed at the following website:
http://www.hmtreasury.gov.uk/controlled_foreign_companies.htm.
3. Details on the foreign branches consultation, that the
Government committed to at the June Budget, can be accessed at the
following website: http://www.hm-treasury.gov.uk/consult_taxation_of_foreign_branches.htm.
4. The Patent Box and R&D tax credits consultations are
formally launched for the first time today. Details can be
accessed at the following websites: http://www.hm-treasury.gov.uk/consult_randd_tax_credits.htm
and http://www.hm-treasury.gov.uk/consult_patent_box.htm.
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