The Government has published the document entitled ‘Corporate Tax Reform: Delivering a More Competitive System’. This document shows how the Government will work with business to enhance UK tax competitiveness. It is designed to provide business with certainty over the Government’s plans and support the recovery by giving business the confidence needed to invest in the UK.
The Government’s aim is to create the most competitive corporate tax regime in the G20. It will adopt the following principles:
Lowering rates while maintaining the tax base – It is the Government’s view that in general a low corporate tax rate with fewer reliefs and allowances will provide the best incentive for business investment with the fewest distortions.
Maintaining stability – A stable tax system is vital to business. The Government will avoid unnecessary changes to tax legislation. In bringing forward reform, the Government will work with business to ensure that any changes improve the sustainability and long-term stability of the corporate tax system.
Being aligned with modern business practice – The way businesses operate changes over time, and with globalisation and technological development the pace of change over the last 20 years has accelerated. The tax system needs to keep pace with these developments and not stifle adaptation or create perverse incentives for business.
Avoiding complexity – The Government considers simplicity to be a feature of good tax policy. However, complexity in how businesses operate and the diversity of the business population will mean some complexity in the corporate tax system is unavoidable. In bringing forward reforms, the Government will seek to avoid complexity where it can.
Maintaining a level playing field for taxpayers – The tax system should be fair across corporate tax payers without distorting commercial decisions. This can support a limited number of special allowances and reliefs, for example where there are market failures.
For more information go to http://www.hm-treasury.gov.uk/corporate_tax_reform.htm
