Osborne looks both ways on tax

Step forward George Osborne. His aim as Chancellor has been to turn Britain into a tax haven for multinational business.

He said early in his term of office that he intended to make the UK the most attractive place among OECD nations in which to do business and he has followed this through in successive Budgets, where cuts have brought corporation tax down from 28 per cent to 21 per cent.

In addition he has engaged directly with big companies and has specifically tailored a multinational tax regime to anchor them in the UK. A key aspect of this is to stop double taxation of profits brought back to the UK and separately give companies an effective tax rate of five per cent on the structures they set up offshore to finance operations. 

Almost no major companies now speak of leaving for tax reasons, and others, notably WPP, have announced their intention to move back to the UK. 

Indeed, earlier this week KPMG, the professional services practice, published a poll that showed Britain has leapt ahead of low-tax rivals like Switzerland to become multinationals’ favourite low-tax regime. 

None of this has done the Chancellor any harm at all. His efforts to attract business have been a success and he has got credit for them. He described the change in business sentiment as a ‘remarkable turnaround’, which seems a fair comment given that in the previous five years 22 companies left the UK.

But he has also won wide praise among the public for his stand against multinational tax avoidance. In the past week we have see him taking the lead at a press conference alongside his opposite numbers from Germany and France and writing a series of articles. In all these he voiced his determination to end the practice of multinationals choosing the most favourable location in which to make profits and pay tax.

Can he really get away with having it both ways?

Anthony Hilton is City commentator on London’s Evening Standard

This article was first published on prweek.com