Company taxation.

Book section

Corporate tax rates have fallen in many developed countries since the current UK corporation tax rate of 30% was introduced in 1999. This trend may make it difficult for the UK to sustain a 30% tax rate and remain an attractive location for investment. Decisions of the European Court of Justice may also threaten the government’s medium-term projections for corporation tax revenues. 2005 saw two separate increases in the taxation of North Sea oil and gas producers. We explain why it is fear of further tax rises, rather than the level of the tax rate itself, that is likely to have a detrimental impact on investment. The 2005 Pre-Budget Report announced the final demise of the zero starting rate of corporation tax, introduced in 2002. We review the brief history of this curious initiative, and suggest there are important lessons to be drawn.

Authors: Bond, S

• Publisher: Institute for Fiscal Studies
• Host title: The IFS Green Budget: January 2006
• Pages: 164 - 171
• Place of publication: London
• Publication date: 2006-01-01
• ISBN: 1-903274-44-3
• Language: English