The UK has maintained its position as one of the most attractive tax regimes, according to KPMG’s annual survey of tax competitiveness.
When executives in large businesses operating in Britain were asked to name their top three most attractive countries from a tax perspective, the UK was the most commonly cited in that group, albeit Luxembourg, Ireland and Switzerland have slightly closed the gap.
Results suggest that businesses aren’t looking for further changes. In fact, simplicity and stability were ranked as more important than a low effective tax rate.
These latest results suggest that there has been a levelling of the playing field on tax. The UK leapt into first place in 2012 and, although it has narrowly held on to that lead, it is now ranking closely alongside key competitors.
Although the UK has become more attractive to business in terms of its actual tax regime, some of the rhetoric around tax could deter investment to the UK, according to the survey. 67% of FTSE 350 respondents said the media and political debate is likely to reduce investment in the UK with the sentiment even more marked among the FTSE 100 where 88% took this view.
Executives in foreign owned subsidiaries were more neutral on the debate with 80% saying it had had no effect and the remainder equally split on whether it made them more likely to reduce their UK investment or, conversely, to increase it.
Trend towards increasing transparency continues
The results suggest that the debate is having an effect on how companies communicate on tax. Businesses questioned generally recognised the need to become more transparent in relation to their tax affairs. Over half said that they either had or would become more transparent in their tax reporting. The remainder felt they were already sufficiently transparent. None said they would become less transparent.
Respondents were asked what single specific tax or regulatory measure could be used to drive growth over the next 12 months. The most popular cited was to provide tax relief on capital investment, followed by simplification or reducing complexity and then by increasing certainty.
Read more about KPMG’s tax findings.