Overseas companies looking to conduct business in foreign markets discount the UK due the complexity of its tax system, accountancy firm Grant Thornton has warned.
Research conducted by Grant Thornton found that 77% of global private companies and 70% of those based in the US say tax issues are a significant factor in deciding where to establish an operating base overseas.
The UK’s highly complex tax system found itself under scrutiny earlier this year over the new non-dom rules – which include levying a one-off charge at wealthy non-domiciled residents in the UK of £30,000 after seven years.
Roopa Aitken, international corporate tax partner at Grant Thornton, said private companies are going so far as to relocate their parent company out of the UK, with the bulk of recent relocations going to Ireland.
The added complexity and compliance burden of doing business in the UK is resulting in many overseas companies taking their money elsewhere. “Companies looking to invest in the UK will recognise and compare this with other countries; in many, perhaps most cases the conclusion will not favour the UK,” warned Aitken.
However, just across the water Ireland seems to be faring much better. There the headline tax rate is less than half of that in the UK at just 12.5%, and there is a reduced administrative burden thus creating an accommodating environment for inward investment, parent company location and European holding companies.
© Crimson Business Ltd. 2008