Government to review FIDs strategy

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The Independent Online
Geoffrey Robinson, Paymaster General, last night announced a government review of foreign income dividends. A consultation excercise is due to report next spring in order to be able to incorporate any changes into the next Budget. This signals a government climbdown following protests from industry that Budget tax changes unfairly penalised overseas earners. While companies will be disappointed that they are not being granted immediate relief, this may signal the Government's willingness to consider the total abolition of advance corporation tax.

Mr Robinson detailed possible concessions the Government might make to the parliamentary committee examining the Finance Bill. He said it was already proposed to exclude international headquarters companies, defined as 80 per cent-owned by non-British residents. One possibility would be to reduce this percentage, allowing other companies to escape. Other possibilities would be to allow companies which pay more than a certain percentage of their dividends abroad to reclaim ACT; to relate their ACT liabilities to what they historically paid; or to keep FIDs but restrict the proportion of total dividends which they could represent.