08/12/2011

According to media reports, Chancellor George Osborne has put forward plans to change offshore tax rules to make the UK more competitive.

The plans are understood to be part of the Government’s agenda to slash red tape and make the UK’s tax system as competitive as possible within the G20. The Treasury has said that companies’ offshore operations will now only be affected by British tax in “situations that pose the highest risk of artificial diversion of UK profits”.

Businesses in other situations will now be made exempt from offshore tax rules following a consultation in which they argued that compliance burdens could lead to firms avoiding basing their company headquarters in the UK.

In his Autumn Statement, announced recently, George Osborne said changes needed to be made to entice companies to set up in the UK rather than elsewhere.

Speaking in the Commons this week, Osborne also said he would fight any proposed 'Robin Hood tax' on banks and aim to reduce the tax bill of multinational companies by up to £840 million a year by 2016.

Exchequer Secretary to the Treasury, David Gauke, said, “The consultation responses we are publishing today demonstrate the government’s commitment to listening to the views of those affected by changes to the tax system.”