By Lyndsey Hall
The Free Enterprise Group of Conservative MPs has called for a ten per cent reduction in the corporate tax rate, and a re-write of the tax code which would require foreign businesses to pay an equal amount of tax to that paid by UK companies.
According to the group of forty senior Conservatives, cutting the corporate tax rate would make the UK more competitive, and would be subsidised by abolishing tax reliefs and “international avoidance structuring”. The report published last month by the group, which is headed by Charlie Elphicke, suggests that this system would make tax avoidance very difficult and unappealing, particularly for “foreign-based multinationals”.
The changes suggested in the report would make the UK “one of the lowest tax jurisdictions in world”, and would offer “a loophole free system fit for the internet age”, according to the group. However, the new tax code would not completely eradicate tax evasion: “Tax avoidance would still be possible, yet it would be more limited than at present”.
The report comes in the wake of revelations of tax avoidance by many well-known multinational corporations, including Starbucks, Amazon and Google. What is interesting is that, as always, there is already legislation to deal with this problem. Under the existing law an expense has to be wholly and exclusively for the purpose of the business to be tax allowable. The Inspector of Taxes should disallow the expenses and let them fight it out in the courts.
What do you think about the proposed changes? Should foreign-based businesses pay the same amount in tax as UK businesses? Let us know your thoughts in the Comments.
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