Michelle Quest, Head of Tax at KPMG in the UK comments on corporate tax changes announced in the Budget that will make the UK more competitive.
Commenting a number of corporate tax changes announced in today’s Budget, Michelle Quest, Head of Tax at KPMG in the UK, said:
“The Chancellor has announced a number of changes to the corporate tax system to reinforce the message that the UK wants international business to come to the country, but to ensure that it pays an appropriate amount of tax. Key changes announced include the further reduction of the headline corporation tax to reach 17% by April 2020, measures to tackle tax avoidance and evasion, changes to interest rate relief, as well as a Business Tax Roadmap.
“Under review are measures such as withholding tax on royalty payments in order to tackle avoidance in relation to overseas royalty payments, as well as the Double Taxation Treaty Passport. Additionally, the Substantial Shareholdings Exemption regime will be reviewed to make sure it is delivering on its original policy objectives whilst ensuring that the regime is simple, coherent and operating in a manner that keeps the UK internationally competitive.
“The treatment of corporate tax losses will also be modernised, so that they can be used more flexibly, but that losses can only be used against 50% of the profits generated each year; in banking, the 50% loss restrictions already in force will be further reduced to 25%.
“These latest announcements reinforce the commitments the UK Government has made as an early adopter of the OECD’s BEPS proposals, whilst encouraging further investment in the UK by overseas businesses. This is a delicate balancing act, but the announcement of a Business Tax Roadmap will help to give businesses the visibility and predictability in relation to the tax system that they are demanding according to our recent survey.”
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