January 08, 2007
Elizabeth Colman
With its ramshackle and expensive public transport, overpriced homes and costly office space, London already faces a challenge in selling itself as a corporate base.
Now tax, once a plus point for Britain, is emerging as a negative and accountants are advising foreign companies against basing their headquarters in Britain in favour of countries with a lower corporate tax burden.
Many Swiss cantons fully exempt foreign holding companies from tax on non-Swiss profits. The Netherlands also operates a lenient regime on the repatriation of foreign dividends, a factor that heavily influenced Shell in moving its corporate headquarters to The Hague. When Experian, the credit analysis group, demerged from GUS, it moved to Dublin, which taxes profits at 12.5 per cent. COLT Telecom chose Luxembourg as its holding company location.
With more companies reviewing the cost of their London operations, foreign multinationals in search of a European base are avoiding the UK altogether.
International tax experts have urged Gordon Brown to relax tax laws that target foreign companies with subsidiaries in Britain, particularly after the European Court of Justice said that the rules breached European laws.
Chris Morgan, the head of international corporate tax for KPMG, the global accounting firm, said that the recent decision by Kraft to move its European headquarters to Switzerland was the tip of the iceberg. “With Kraft moving, it’s a warning bell,” he said. “Lots of companies are regularly thinking, should they be here? To move out of the UK would be a massive move for a UK plc. Nevertheless, they are thinking ‘Should we be here?’.
“London is a world-class centre and everything is done in English — these are the reasons companies come to London. Unfortunately, corporate tax is not helping companies to stay.”
http://www.timesonline.co.uk/article/0,,5-2536040.html
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