US Firms Eye ‘Tax Haven’ UK After George Osborne’s Corporation Rate Cuts
US firms are using the UK as a haven in which they can symbolically shift their companies to benefit from the country’s relatively low corporation tax regime.
Several American companies have already sailed parts across the Atlantic and set up in the UK by moving a handful of executives over to establish a legal and tax base, while keeping their headquarters and operations in the US.
That is according to an investigation by the news agency Reuters, which said seven US businesses had already re-based to London, among them the insurance giant Aon and energy firm Ensco.
There had also been claims that two failed high-profile merger attempts involving American corporations Omnicom and Pfizer and smaller British companies were in part motivated by the tax savings to be had in the UK.
UK Chancellor George Osborne has overseen a sharp reduction the country’s corporation tax rate since he took the Treasury seat in 2010.
In 2014 the main corporation tax rate was 21% and it will fall to 20% in the following year. In 2010 it was 28%.
And in a further bid to draw in foreign firms, the chancellor has also brought in a number of tax incentives, such as the “patent box” – which gives corporation tax relief on profits made from intellectual property developed in the UK.
But Reuters claimed there had been little tax benefit from US relocations to the UK because some firms had simply taken advantage of the country’s tax credit system. Others had not publicly reported their tax payments in the UK.
The Treasury denied the UK is a tax haven and said the tax reductions have been to promote genuine business investment.