UK and International Tax news
Corporation Tax Reform
Tuesday 30th November 2010
The Government has published details of its Corporate Tax Reform programme consisting of a series of essential reforms designed to improve the UK’s tax competitiveness. Measures include the introduction of new Controlled Foreign Company (CFC) rules and a commitment to introduce a Patent Box.
In addition to the announcements in the June 2010 Budget of proposed reductions in the main rate of corporation tax from 28% to 24% over the next 4 years and a reduction in the small profits rate from 21% to 20% from April 2011, the Government has published the document ‘Corporate Tax Reform: delivering a more competitive system, to cover the following reforms:
• a Corporate Tax Road Map that commits to principles to underpin these reforms and a clear timetable to deliver these changes, including how the Government will engage with business at each stage of policy development;
• details on how the Government will reform the UK’s outdated CFC rules by introducing more targeted rules in 2012 and how they will apply to financing and intellectual property. As a first step to make the rules more competitive, a package of interim improvements will be introduced in 2011;
• introducing a Patent Box in April 2013 – a 10% CT rate on profits from patents, reaffirming the Government’s commitment to retain and build on the existing RandD tax credit scheme to create the right environment for innovative companies to prosper;
• a commitment to legislate an opt-in exemption for profits earned in foreign branches of UK companies in 2011. Under this more territorial approach, companies in the new regime will no longer be subject to UK CT on their foreign branch profits.
If you would like further information on the above, please contact Keith Rushen on 0044 (0)20 7486 2378.Contact Us