The new UK Chancellor, Rishi Sunak, revealed his maiden budget on March 11. In it, Sunak pledged to waive business rates on small retailers, to introduce a new tax on plastics, and to remove value-added tax on electronic publications.
The Chancellor announced that any eligible retail, leisure, or hospitality business with a rateable value below GBP51,000 (USD65,670) would, over the coming financial year, pay no business rates, the UK’s commercial property tax. Further, he revealed that the government will provide support for businesses struggling with paying their tax dues, by “scaling up” the Time to Pay service.
It also emerged in the budget that the UK Government had decided to reduce the lifetime limit for Entrepreneurs’ Relief to GBP1m (USD1.25m) from GBP10m, affecting qualifying disposals on or after March 11, 2020. Entrepreneurs’ Relief reduces the amount of capital gains tax paid on … Read More »
Following their election win, the UK’s Conservative Party has said it will use new “freedoms” from Brexit to set its own tax policies, including in the area of VAT.
In its pre-election manifesto, the Conservatives promised to not raise rates of income tax, VAT, or National Insurance. It also cancelled plans to lower the corporate tax rate from 19 percent to 17 percent from April 2020. The Government has however committed to lower the tax burden of business rates (the UK’s commercial property tax), and increase the employment allowance tax relief for small businesses. Further, the research and development tax credit rate will be raised to 13 percent, and the Government intends to review the activities in scope.
It also reportedly intends to also raise the National Insurance threshold to GBP9,500 next year.
On tax enforcement, the Conservative Party committed to:
Double the maximum … Read More »
At the time of writing, Prime Minister Johnson’s slight variation on his predecessor’s plan had passed the House of Commons, but MPs had rejected the government’s moves to force the plan through in just three days. The deal, which had previously secured the agreement of the European Union, would involve a hard Brexit for the UK but ensure that a hard border does not materialize between Northern Ireland and the Republic of Ireland to its south.
According to the EU, the deal provides that Northern Ireland would remain aligned to a limited set of rules related to the EU’s Single Market in order to avoid a hard border. Specifically, it would be bound by EU legislation on goods, sanitary rules for veterinary controls (SPS rules), rules on agricultural production/marketing, VAT and excise in respect of goods, and state aid rules.
It was … Read More »
It had been reported that Boris Johnson’s UN General Assembly appearance would be dominated by announcements of “rolling out the red carpet” to investors, particularly from the United States, with a proposed reduction in the corporate income tax rate to 17% planned to set the cat among the European pigeons, post-Brexit, and a trade deal with the US hoped to be on the cards.
However, the major Boris Brexit Blockbuster speech was somewhat derailed by events in the courts back home, and his speech on technology matters (a key planned focus area once freed from European regulatory and tax ‘shackles’) as delivered to the UNGA was – by all accounts – both perplexing and perplexed, taking in limbless chickens, Greek mythology and malevolent household AI.
Matters of tax and economics have remained mostly off the table since the Prime Minister’s earlier than anticipated … Read More »
The UK Government has released a summary of the feedback that it had received on its consultation on the new Digital Services Tax and set out amendments to its proposals to ensure the regime functions effectively and as intended.
Plans to introduce the levy were confirmed in the 2019 Budget, and are broadly in line with moves in other countries in this area. The Government has proposed that the tax will apply to revenue generated by search engines, social media platforms, and online marketplaces, to revenues from those activities that are linked to the participation of UK users. It will apply only to groups that generate global revenues from in-scope business activities in excess of GBP500m per year. Businesses will not have to pay tax on their first GBP25 million of UK taxable revenues.
According to the Government, with regard to the … Read More »
According to European Council President Donald Tusk, a special place has been reserved in the afterlife for those seeking to bring about a hard Brexit without a plan. By “special,” Mr Tusk didn’t mean “nice.” What he meant was that Boris and Nigel won’t be needing to pack their winter clothes for life in the forever after.
Unsurprisingly, such comments have merely served to fan the flames of the already white-hot Brexit debate. But, away from the fiery rhetoric, member states are at least beginning to make preparations for a no-deal Brexit in an attempt to cushion the blow for taxpayers and businesses. How effective they will be is another matter.
In the Netherlands, State Secretary of Finance Menno Snel informed parliament late last month that the Tax and Customs Administration is preparing for the UK’s withdrawal from the European Union without … Read More »
On November 26, a legal challenge brought by 13 UK expats against the decision of the EU Council to endorse the start of negotiations with the UK on exiting the European Union was rejected by the General Court of the EU. So is Brexit now an unstoppable force? Perhaps the only question left is what sort of Brexit will it be? Prime Minister May’s EU-lite? Canada +++? The Norway option? WTO rules?
The possibility of another referendum on the matter remains, although the chances are slim. What is crystal clear however, is that the waters are now as muddy as ever. So much so that businesses have largely given up attempting to plan for Brexit. At least, that is the conclusion drawn from a survey by accountants Moore Stephens of Brexit preparedness within the business community.
According to the firm, since last … Read More »
Chancellor of the Exchequer Philip Hammond has apparently acquired the nickname in parliamentary circles of “Spreadsheet Phil.” This is suggestive of a man who likes to play around with numbers. A lot. Not the best company at parties, perhaps. A meticulous planner maybe, not given to spontaneous policy announcements. Except that he kind of is. His first Budget as Chancellor was marked by dramatic about-turn on self-employment taxation, and his latest Budget, announced October 30, by a digital services tax, set to commence in 2020. Incidentally, Hammond moved Budget day forward by one day so it wouldn’t be announced on October 31 – Halloween – and suffer a pun-fest at the hands of the media. As it turned out, the 2018 Budget was largely free from tax horrors. But many businesses will surely have been a least a little bit … Read More »
As far as taxation goes, preparation and planning have long been integral to a successful business or investment strategy, no more so than in today’s post-BEPS, uber transparent world. The tax headlines are littered with seemingly well-prepared companies with well-staffed tax departments, embroiled in long, expensive disputes with the tax authorities. So woe betide any taxpayer who jumps into the world of international trade and commerce without having given thought to the tax consequences.
However, sometimes taxpayers can find themselves in an impossible position, planning for outcomes that are unknown. In Europe, both the United Kingdom and the European Union have been urging businesses to prepare for the possibility of a no-deal Brexit. Which must be a bit like asking them to plot a course on a map which has had all the names of the roads, towns, and cities deleted. … Read More »
We all know that corporate taxation entails more than just a simple percentage of a company’s profits; it is far, far more involved than that. The 15 weighty tomes that are the final reports of the base erosion and profit shifting project – the fruits of the OECD’s countless hours of labor – are a testament to that.
At the heart of it all is transfer pricing. But, mention the phrase “transfer pricing” to the uninitiated, and they will probably return a blank, bovine stare, almost puppy-like in its wide-eyed, head-slightly-tilted innocence. You’d almost see cartoon-esque question marks forming in their eyes. Start to talk about transfer pricing to them for any length of time, and you might be in danger of losing a valued friend or acquaintance (“where’re you going? I haven’t finished explaining the comparable uncontrolled transaction method yet!”). … Read More »