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UK Announces More Tax Updates For Finance Bill 2013
Positive key measures implemented in the Finance Bill 2013 include:
- Reduction in the UK CT rate to 21%
- CFC reform providing greater certainty to international tax structuring
- Foreign branch exemptions providing opportunities for commercial,legal and administrative savings
- Taxation of intellectual property (patent box regime effective April 2013) and the continued improvements to R&D tax credits
- Introduction of creative industry tax credits.
However the introduction of the GAAR, alongside other specific anti-avoidance legislation, and the government bowing to media pressure on legitimate tax planning, is threatening to sour the perception of the UK as a centre for business. The UK is aligning more with France and Germany in a new "triple entente" and less so with Ireland and the Netherlands, which are stalwart EU regimes that (successfully) apply tax policy to encourage investment.
The UK could become the most viable option for multinationals to house a European holding company. However the announcements relating to increased investment in HMRC (2500 additional Inspectors) and the introduction of sweeping anti-avoidance legislation will mean that 2013 is going to be a busy dispute resolution year for UK business. Multinationals should continue to monitor risk and look for certainty options (rulings, informal discussions with HMRC Inspectors) wherever possible.