Darling moves to stop Ireland stampede by top companies
UK Chancellor will offer assurances in speech as multinationals eye up lower costs here
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British Chancellor of the Exchequer Alistair Darling
Monday May 19 2008
British Chancellor Alistair Darling will this week open the door for fresh tax concessions in a bid to halt the stampede of major UK companies setting up headquarters in countries with favourable tax regimes such as Ireland's.
Several leading UK companies have in recent weeks announced their intention to move their headquarters to Ireland to take advantage of lower corporation tax here.
They included high-profile companies like publisher and events organiser United Business Media (UBM), which is considering moving its tax base to Ireland. British drugmaker Shire is also planning to move its parent company to Ireland "to help protect the group's taxation position".
Low corporation tax -- currently 12.5pc -- has formed the cornerstones of Ireland's favourable tax regime, one that has been the major factor in enticing foreign direct investment into Ireland. The corporate tax rate here compares to a rate of 28pc in the UK and an even higher 35pc in the US.
Mr Darling is set to use a speech to the Confederation of British Industry business lobby tomorrow to soothe multinational companies' concerns about potential taxes on intellectual property rights held offshore, according to The Sunday Times.
This would include profits on patented products and revenues, which form a major slice of corporate profits in the technology and pharmaceutical industries.
Concerns
Major businesses are concerned over having to pay hundreds of millions of pounds extra in tax as a result of the move.
Apart from UBM and Shire, many more UK companies are reported to be considering a departure to foreign shores.
The proposals on intellectual property were buried in a discussion paper on exempting foreign dividends last year.
Mr Darling's speech in London will attempt to placate the business community and insist any changes to the tax system were not intended to claw any more revenues from business. The intellectual property row is the latest in a sequence of tax rows for Mr Darling.
The British Chancellor was forced into a partial climbdown over his changes to capital gains tax -- which replaced a sliding scale with an 18pc flat rate -- by introducing an "entrepreneur's relief" 10pc rate on the first £1m in gains, in January.
Last week, Mr Darling announced plans to spend £2.7bn compensating those who lost out as a result of the abolition of the 10p income tax rate -- giving all basic-rate taxpayers a handout in the process -- as voters vented their fury on the British government in local elections earlier this month.
He will also unveil the members of a new business-government forum on tax announced at the end of April.
The committee will discuss how the business tax system can provide the long-term certainty needed by multinational companies.
- Pat Boyle
