UK's appeal on tax is under threat, PwC warns

Britain's status as a competitive tax regime is under pressure as rival economies ease tax burdens for businesses, a report says today.

The UK has slipped from 11th place in 2006 to 18th this year in the latest "Paying Taxes" rankings, published by PwC, the World Bank and International Finance Corp. Last year Britain was in 16th spot.

The rankings rate tax regimes for the number of payments required of companies and the time required to comply with rules as well as the total tax rate for a case-study firm.

Britain's results are the same as last year and are better than average on all three counts, but 33 other countries have improved their attractiveness to small and medium enterprises (SMEs), threatening the UK's relatively strong position, the report said.

Globally, the total tax rate for SMEs has fallen 8.5 per cent since 2006 to 44.8 per cent, compared with 37.3 per cent in the UK.

Time spent complying with taxes is 110 hours in Britain, compared with a 227-hour global average, but 54 hours have been knocked off the worldwide figure. The number of payments required in the UK is eight, compared with 28.5 globally, but that figure has fallen by 4.7 in a year.

Changes in the last five years globally include 133 major reductions in corporate income tax as well as increasing adoption of online registration and payment and a single tax base.

Emerging markets and Asian low-cost centres above Britain include the Maldives at number one, Hong Kong in third place and Singapore fourth. But the UK also lags behind developed nations such as Luxembourg, Canada and Ireland. The UK still outranks other mature economies such as the US, France and Germany, which do not make the top 30.

The Chancellor announced last year that he would reduce corporation tax from 28 per cent to 24 per cent over four years. But he also cut capital allowances, whereas Luxembourg has generous allowances that make its total tax rate more competitive.

Neville Howlett, external affairs director for tax at PwC, said: "While we still do well, the signs are that others are moving more quickly than we are. We need to be up at the top to make sure we keep attracting investment."

He added that more tax changes are working through the system that could improve the UK's ranking next year.

The Government is trying to encourage businesses to set up in Britain after decades of over-reliance on the financial services industry to generate taxes and jobs. However, it has to balance short-term reductions to the tax take with the longer-term aim of boosting entrepreneurship.

Mary Monfries, a tax partner at PwC, said Britain did not have specific industries or resources to attract investment and that the general tax and business regime was therefore important for luring companies.

"Our tax regime needs to stand out from the crowd when it's an important factor for businesses choosing where to locate. Given the shift from west to east, we can't afford to have the likes of Hong Kong and Singapore in third and fourth position with us moving towards 20th."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map