Corporation tax cut provides ‘food for thought’ post-Brexit
A solicitor at award-winning London firm Mackrell Turner Garrett has said that a cut in corporation tax would help to encourage business to come to, and remain in, the UK – despite such a move potentially impacting public spending.
Comments come after The Sunday Times revealed rumblings within the government which suggest that corporation tax may be cut in half from 20% to 10% post-Brexit, in order to encourage companies to do business in the UK if trade negotiations fail.
Mohit Pasricha, a member of Mackrell Turner Garrett’s corporate and commercial department, said:
“With one of the lowest corporation tax rates in the EU, a further reduction in corporation tax rates may provide the proverbial ‘hook’ for existing businesses to retain their operations in the UK.”
He pointed out that the average rate of corporation tax in the EU stands at 22%, above the UK’s current rate, whilst from a global perspective; Singapore imposes a levy of 17% and Ireland provides a rate of 12.5% – helping it become the home to 90% of the world’s pharmaceutical and software companies.
“Arguably, an attractive rate of corporate tax provides the necessary reassurance to businesses that the UK remains a desirable location, whilst also demonstrating it still has the ability to reel in the biggest global businesses.
“It may provide businesses that were previously looking to relocate post-Brexit with some food for thought as to whether or not they will formally proceed with leaving their UK-based operations. However, corporation tax will undoubtedly be one of many other important considerations (for example, the free movement of workers).
“Nevertheless, there remain serious concerns as to how the UK will cater for providing one of the lowest corporation tax rates in the G20.
“In light of previous corporation tax cuts, it may be the case, as previously suggested, that the public spending pays the ultimate price for the UK’s desire to retain and attract global businesses.”