UK corporate tax far from the most competitive in the G20
The UK Government has stated that it aims to have the most competitive corporate tax regime in the G20.
It has announced that it intends to reduce the main UK corporation tax rate from 28 percent when it took office to 23 percent by 2014.
Research by Oxford University Centre for Business Taxation at Saïd Business School, University of Oxford, shows that the UK corporate tax system is currently ranked 9th in the G20 for effective average tax rates (see Table below).
The government’s reforms would improve the UK’s ranking to 5th – but only if no other G20 country also reduced its effective rate.
The main problem for the UK is that allowances for capital expenditure are the lowest in the G20. While the UK has the 5th lowest tax rate, this rate is therefore applied to a broad definition of profit, implying that the effective tax rate is much higher. Reforms which reduce allowances as a way of paying for rate reductions mainly redistribute the tax burden between companies, rather than making the tax system as a whole more competitive.
The findings are announced in a new report « the G20 Corporate tax ranking 2011 » which will be presented at the Oxford University Centre for Business Taxation Summer Conference at Saïd Business School on July 11th. An electronic copy of the report is available on request from email@example.com.
Table 1. Ranking of effective average tax rates, 2011
Shows the estimated ranking of the G20 countries for their EATR (effective average tax rate) at the beginning of 2011.
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|The Oxford University Centre for Business Taxation is an independent research centre which aims to promote effective policies for the taxation of business. Professor Michael Devereux is Director of the Centre. The Advisory Board of the Centre is chaired by Sir Derek Morris, Provost of Oriel College, Oxford.
The Centre undertakes and publishes multidisciplinary research into the aims, practice and consequences of taxes which affect business. Although it engages in debate on specific policy issues, the main focus of the Centre’s research is on long-term, fundamental issues in business taxation. Its findings are based on rigorous analysis, detailed empirical evidence and in-depth institutional knowledge.
The Centre provides analysis independent of government, political party or any other vested interest. The Centre has no corporate views : publications of the Centre are the responsibility of named authors. The Centre is not a consultancy : it reserves the right to publish the results of its research.
| Established in 1996 the Saïd Business School is one of Europe’s youngest and most entrepreneurial business schools with a reputation for innovative business education.
An integral part of Oxford University, the School embodies the academic rigour and forward thinking that has made Oxford a world leader in education and research.
The School has an established reputation for research in a wide range of areas, including finance and accounting, organisational analysis, international management, strategy and operations management.
The School is dedicated to developing a new generation of business leaders and entrepreneurs and conducting research not only into the nature of business, but the connections between business and the wider world.
In the Financial Times European Business School ranking (Dec 2010) Saïd is ranked 11th. It is ranked number one in the UK (11th worldwide) in the FT’s combined ranking of Executive Education programmes (May 2011) and 27th in the world in the FT ranking of MBA programmes (Jan 2011). The Oxford MSc in Financial Economics is ranked 4th in the world in the 2011 FT ranking of Masters in Finance programmes (June 2011).
In the UK university league tables it is ranked first of all UK universities for undergraduate business and management in The Guardian (May 2011) and has ranked first in eight of the last nine years in The Times.