The UK has jumped five places to 10th position in a World Bank league table of business-friendly tax regimes, reflecting the corporate tax cuts introduced by former Chancellor George Osborne, who was determined to demonstrate that Britain was “open for business”. In addition, the country had the highest ranking of any G20 country, followed by Canada in 17th place.
According to the World Bank’s table, the rise in the rankings also show the UK’s higher score on a new indicator used for the survey, which measures how easy it is to receive VAT refunds, correct errors in tax forms and comply with a tax audit.
In order to come up with the rankings, the World Bank measures the burden of tax costs and compliance using a medium-sized, fictional manufacturer. Using the fictional firm, the table measures how it pays three main taxes that, on average, amounted to 40.6 per cent of its commercial profit. The bogus firm took 251 hours to prepare and, file and pay whereas, if it had been in the UK, complying with tax obligations would have been far less onerous.
If the fictitious firm were here, it would take around 110 hours and the total of all the taxes borne as a percentage of commercial profit was only 30.9 per cent in corporation tax and National Insurance Contributions (NICs). In addition, getting a VAT refund and correcting an error in a corporation tax return was less time-consuming and costly than in many other countries.
However, as one commentator pointed out, while entering the top 10 indicates that the UK is a great place to do business, with tax reform on the agenda in other countries, it is crucial for the Government to look for ways to improve the UK tax system on an ongoing basis.
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