Britain to cut corporation tax for Brexit recovery

LONDON: Seeking to encourage continued investment in a Britain rattled by the June 23 Brexit vote, chancellor George Osborne on Monday announced that corporation

LONDON: Seeking to encourage continued investment in a Britain rattled by the June 23 Brexit vote, chancellor George Osborne on Monday announced that corporation tax would be cut from 20% to 15% — the lowest in any major western economy.

HT Image

Reiterating his adverse forecast in a Britain outside the European Union, Osborne told the Financial Times that the country faced a “very challenging time”, but he added: “We must focus on the horizon and the journey ahead and make the most of the hand we’ve been dealt.”

Amid uncertainty in business and industry circles, Osborne pledged to cut corporation tax to 15% and insisted that Britain was “open for business”. However, no date was announced as to when the new tax rate will come into effect. There are reports that some banks are considering re locating staff outside London.

However, former World Trade Organisation chief Pascal Lamy told BBC that Osborne’ s plans on corporation tax should take into account the EU’s position on the issue, since it could be seen as the start of Brexit negotiations. “The UK is already activating one of the weapons in this negotiation, which is tax dumping, tax competition. I can understand why he does that, because obviously investors are flowing out from the UK, and he wants to provide them with some sort of premium that would make them think twice before they leave the UK”.

“He has to think about the impact of this on the continent. This will be seen as the start of the negotiation. And I’m quite convinced, if you want a proper balanced win-win relationship in the future, starting with tax competition is not the right way to prepare this negotiation ,” he added.