UK tax competitiveness slips
CORPORATE taxation policy in the UK is failing to keep up with rival nations and has slipped further down the international competitiveness rankings, according to a report out today from PwC.
The UK fell to 18th place out of 183 countries measured, down from 16th last year and 11th in 2006.
Other countries – including key rivals like Hong Kong, Singapore and Ireland – are in the top 10, and have taken action to improve their attractiveness to companies, PwC said.
The study equally weights the tax rate paid, the number of payments made each year and the time taken to comply with tax requirements.
In terms of compliance, the UK performs well, with eight payments per year and 110 hours required to pay the necessary bills – yet it ranks only 83rd in terms of total tax rate.
Including profit, employee and other taxes, the total rate comes to 37.3 per cent.
“The government has taken positive steps, cutting the headline rate of corporation tax,” PwC’s Neville Howlett told City A.M.
“However, it countered that by reducing capital allowances, though further reductions will feed through in future studies.”
Howlett also suggests the government follow the example of countries like Sweden which allow several tax payments to be made jointly, cutting the administrative burden on companies and streamlining the compliance process.
The study is based on the example of a medium-sized firm, and comparing its tax payments and the related administrative burden across different countries. “Compliance burdens are particularly important for firms of this size,” said Howlett.