The one single proposal worth celebrating was the one to bring the UK into line with just about every other European country (except Ireland) and exempt dividends from overseas subsidiaries from UK corporation tax (pdf), which has always been part of the MW manifesto, e.g. point 2 here.
Seeing as the UK gives credit for overseas withholding taxes and underlying tax (in most cases), the additional UK tax burden is a paltry £1 billion or so, but it is no end of administrative hassle and a deterrent to locating a holding company in the UK. Being an attractive location for holding companies generates considerably more than £1 billion of 'invisible export' income, so that's a win-win.
Let's not forget that the UK scrapped withholding taxes on dividends back in 1999 (which is the other half of the equation, so fair play to them, Labour have done a few things right over the years) and the proposal (see the same pdf) to restrict tax relief for interest costs dovetails nicely with all this (and is also in the MW manifesto, of course), which is still more generous that the rules in most other European countries.
Ultimately, the best way of sorting all this out would be a further radical simplification and simply disallowing interest as an expense and not taxing the recipient on the income (which I believe some other European countries already do), but hey.
Are you all set?
1 hour ago
4 comments:
I like this restricting tax relief for interest costs business. I reckon it would have a very beneficial effect on house prices (ie downwards) as it would undo the skew between BtLetters and residential purchasers, the former being able to get tax relief on their debts and hence being able to pay a higher price than the latter.
Whatever, I would not allow BtLetters to claim any interest relief.
I like simple; simple is good, especially when it comes to taxation.
Nothing personal but the fewer tax accountants and tax consultants a company (and country) the better.
Our owners, a HK PLC, spends a small fortune on getting its tax right.
TGS, does 'HK' mean 'Hong Kong'?
Hong Kong has a tip-top tax system - no VAT, a flat income/corporation tax of 16% or so, and half of all relatively modest revenues are collected via ground rents, taxes on land values etc.
Mark,
Yes.
And yes they do have a good business environment however they do very stupid things like restricting land and building - the Governement not only auctions land but also states how much floor space can be built ie how high they can go. (Or at least that was the method a few years ago, it might have changed). Some argue this is at the behest of the billionaire land owners.
Furthermore, they allow tax releif on mortgages. Thats why they are more prone to property bubbles than we are.
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