24/11/2011

A leading think tank has cited Hong Kong among the tax regimes that Britain should seek to emulate if it wishes to regain its former status as an attractive place to do business.

The Centre for Economics and Business Research (CEBR) issued a report this week, that said that Hong Kong - along with other financial centres including the Cayman Islands, Jersey, Dubai and Ireland - demonstrated how low-tax regimes can be legitimately and lucratively developed.

The organisation made the claim in a new report on the British tax system, which highlighted how the UK has plummeted down the rankings of attractive places in the world to do business in recent years.

The UK was ranked as the fourth most competitive tax regime in the world in 1997, according to the World Economic Forum, but is now ranked in 95th position, suffering in the competition from jurisdiction that have made huge strides in the last decade. Many countries now attract business through "tailor-made tax regimes" and "one-to-one negotiations", according to the CEBR report.

CEBR's chief executive, Douglas McWilliams, said that the 50 per cent tax rate would be increasingly responsible for driving away high value business. He explained, "There is a danger that the 50p tax pushes Britain over an important psychological 'threshold' that breaks any sense of a 'social covenant' these important taxpayers feel towards their domestic tax regime."