THE British Government has moved to stop an exodus of companies leaving for Ireland by pledging to cut its corporation tax rate.
Prime Minister Gordon Brown said he is aiming to cut British corporation tax further to put an end to companies relocating from Britain for tax purposes.
Britain’s corporation tax rate is 28%, compared with 12.5% in Ireland.
Speaking to the annual conference of the Institute of Directors, Mr Brown said: “Our aim ... is to reduce corporation tax even further when we can afford to do so. I want to go further ... and we’re looking at how we can do it.”
This move followed the British Chancellor Alistair Darling announcing on Tuesday plans for a working group that will involve business leaders in a review of the corporate tax regime.
Following the decision by United British Media and Shire to move to Ireland, a survey by the Financial Times among FTSE 100 companies found many more would not rule out a move either.
Guinness owner, Diageo and the world’s biggest hedge fund manager, Man Group would not confirm plans to stay in Britain.
Media group, ITV said in the survey: “We have very different geographic revenue and profit derivation than UBM and we will watch the position as it develops.”
Advertising group, Aegis said if there are ways to get better shareholder value through change of domicile, “[companies] will have to look at it.”
Other companies such as AstraZeneca and advertising firm, WPP would not rule out a move to Ireland earlier in the week.
President of the Irish Taxation Institute, Joan O’Connor said by companies making a decision to relocate here, it is “one of the first major indications Ireland is successfully competing with more traditional locations, such as The Netherlands and Luxembourg, as an international holding company location of choice with HQ type operations moving to Ireland”.
She added: “This of itself has certain benefits for Ireland not just in terms of profile but also in terms of exchequer benefits that may result from establishing Ireland as an appropriate location for the listed parent company.”
Of the 79 FTSE companies surveyed by the FT, 54 either said they had no plans to relocate their headquarters from Britain or ruled out such a move.
Privately, 10 said they were not contemplating a switch.
British Airways said they were staying put as with BP.
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