FIAT Industrial plans to move its tax base to Britain following a tie-up with its CNH subsidiary, in the latest sign that successive corporate tax cuts are attracting global firms.
The trucks and tractor maker, currently based in Italy, said in a prospectus for its merger that the enlarged firm will be incorporated in the Netherlands but resident in the UK for tax purposes.
Britain has cut its corporation tax rate from 30 per cent in 2007 to a planned 20 per cent in 2015. The coalition has also relaxed rules on controlled foreign companies.
Last year media group UBM and advertiser WPP moved back after four years based in Ireland.
“Our ambition is to create the most competitive tax system in the G20,” a Treasury spokesperson told City A.M. “Already our reforms have stemmed the flow of businesses leaving the UK and encouraged a number of companies to move operations to the UK.”
PwC partner Barry Murphy said firms are increasingly seeing the UK as having a stable long-term tax regime. “It’s put Britain back on the map in terms of being more palatable for international firms,” he added.
Fiat’s decision has rattled Italian politicians, with transport minister Maurizio Lupi saying the move “should not only worry us but also stimulate us to create conditions so that companies stay in Italy”.
Fiat Industrial did not comment further. The firm, which split from Fiat in 2011, already has a factory and offices in Basildon. It paid €536m (£457m) in income tax last year, an effective rate of 36 per cent.