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Company Tax Reform – a view from HM Treasury

Company Tax Reform – a view from HM Treasury. Mike Williams Director, Business and Indirect Tax 25 June 2010. Overview. Objectives of reform Roadmap Corporation tax rate cut Taxation of CFCs and foreign branches Summary. 1. Objectives of reform .

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Company Tax Reform – a view from HM Treasury

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  1. Company Tax Reform – a view from HM Treasury Mike Williams Director, Business and Indirect Tax 25 June 2010

  2. Overview • Objectives of reform • Roadmap • Corporation tax rate cut • Taxation of CFCs and foreign branches • Summary

  3. 1. Objectives of reform • To create the most competitive tax system in the G20 within 5 years • To give a clear direction for corporate tax reform and provide long term stability for businesses • To deliver a more territorial tax system

  4. 2. Roadmap • Rates • Reduce the main rate of corporation tax to 24% over the course of four financial years from April 2011 • Tax Base • Reform the CFC rules • Deliver a more territorial basis for taxing the profits of foreign branches • Consultation • Consult with business to review the taxation of IP • Establish a business forum to consult with large businesses on the UK's tax competitiveness • Publish a more detailed Roadmap for corporate tax reform in autumn 2010

  5. Costings Table

  6. 3. Corporation tax rate cut • Reduce corporation tax main rate from 28% to 24% over 4 years, from April 2011. 24% from April 2014 • Reduce small profits rate of corporation tax from 21% to 20%, from April 2011 • Part funded by reductions in capital allowances and reduction in the AIA. Both measures from April 2012. Also funded by the Bank levy

  7. 4. Taxation of CFCs and foreign branches • CFCs • Deliver competitive CFC regime in spring 2012 whilst protecting the UK tax base • Implement interim improvements to the current CFC rules in spring 2011 to enhance competitiveness ahead of full reform • These interim improvements will deliver some of the proposed changes under a new regime

  8. 4. Taxation of CFCs and foreign branches (cont) • Foreign branches • Deliver a more territorial basis for foreign branch taxation in 2011 • Government will consult in summer 2010 on options for reform, including the scope for exemption alongside options for retaining branch loss relief

  9. 5. Summary • By 2012 the UK should have the fifth lowest corporation tax rate in the G20, and will continue to have the lowest rate in the G7 • The reforms will have a positive impact on investment and growth • Reduces the annual tax burden on companies by over £2bn a year by 2015/16

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