The cost of remaining here

A few days ago I posted a message about the red tape costs of a company in the UK, in respect of compliance on tax law (-this was mistakenly posted on our news board, I'm sorry).

I have now become aware of the finding of KPMG in their annual comparison of corporation taxes, which was published recently. It gives further reasons why companies which are able to are beginning to leave the UK, this time not to avoid costly red tape but to find lower company taxes.

In most countries in the world corporation taxes are continuing to fall. These are the result of the analysis for 2008:

1) In 109 countries analysed the average corporation tax rate is 26% (In the UK it is 28%)

2) In OECD countries it is 27% (down 11% in the past 12 years.) (In the UK it is 28%)

3) In the EU the average rate is 23%, down from 38% in 1996. (In the UK it is 28%)

With many EU countries, therefore, the UK is at a competitive disadvantage. In particular, the rate in Ireland is 12.5%, less than half what it is the UK. Little wonder that companies are beginning to slip across the Irish Sea!

Companies which decide to locate or relocate elsewhere are not being unreasonable. They are merely making the most of their resources in the light of prevailing business conditions. Location is one of a variety of factors they must consider. When you add legal complexity and other costly compliance costs, the U.K. must have significant advantages in other areas to attract and hold companies here.