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Tax reforms 'to stop corporate defections'

Published on 28 Jan 2010 under category: legal

New proposals have been put forward to reform UK tax law to make the country more competitive.

Earlier this week the government published a discussion document on the consultation on the treatment of controlled foreign companies (CFCs).

Currently, CFC rules exist to protect UK corporation tax base in cases where UK groups shore up profits in low tax jurisdictions.

Previous attempts to reform the rules have resulted in outcry, with many big companies moving overseas in protest.

Stephen Timms, financial secretary to the treasury said: "This report, drawing on our discussions with businesses, is a key step in designing a system that better recognises the way multinationals operate today, while protecting our tax base."

The moves are intended to prevent companies from relocating abroad in order to avoid paying taxes in Britain.

Another proposal involves imposing an extra tax charge on patents if they increased in value after being moved out of the UK.

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