The UK’s Exchequer Secretary has suggested that there is currently high business confidence in the tax system. One reason for this is that the UK has recently taken measures to improve the attractiveness of its tax system including reductions to the corporate tax rate and the introduction of a patent box system that taxes income from patents at lower rates. He has also said that the UK economy is forecast to grow faster than any other economy in 2014 and that business investment is expected to grow quickly.
The UK corporation tax rate has decreased from 28 percent in 2010 to 21 percent, and it will fall further to 20 percent next year. Tax incentives are in place for research and development, oil and gas exploration, and activities in the creative sector including creation of video games. There is a system of consultation with business before new legislation is introduced. The Exchequer Secretary also noted that the UK is a leading player in the OECD project and action plan on Base Erosion and Profit Shifting (BEPS), and the UK will contribute to the projects in respect of the digital economy, transparency and economic substance.
The international tax system has recently been under the spotlight in the UK owing to publicity surrounding the corporation tax liabilities of certain multinational companies. Public pressure in the UK is likely to spur the government to further efforts to help reform the international tax system.
