UK could ‘slash’ corporate tax to 10% if EU blocks Brexit trade deal
Banks preparing to leave Britain in early 2017: lobby group
LONDON, Oct 23, (RTRS): Britain could slash corporation tax to 10 percent if the European Union refuses to agree a post-Brexit free trade deal or blocks UK-based banks from accessing its market, the Sunday Times reported, citing an unidentified source.
The newspaper said the idea of halving the headline rate from 20 percent had been put forward by Prime Minister Theresa May’s advisers amid growing fears other EU member states will take a hard line in Brexit negotiations.
The tax cut would be used to try and persuade the EU to grant “passporting” rights for financial services firms to continue operating across the EU, the newspaper said, in a sign of the likely animosity of the upcoming divorce talks.
At a Brussels summit last week EU leaders were clear they would not allow Britain to “cherry pick” things such as free access to the market for certain sectors without taking on the full responsibilities of EU membership. “People say we have not got any cards,” the newspaper quoted an unidentified source familiar with the British government’s thinking as saying.
“We have some quite good cards we can play if they start getting difficult with us. If they’re saying no passporting and high trade tariffs we can cut corporation tax to 10 percent,” the newspaper quoted an anonymous source as saying,” the source was quoted as saying.
Cutting corporation tax could attract companies away from the EU to Britain, boosting its economy and challenging Ireland’s preeminence as Europe’s low tax home for large international companies.
EU leaders have warned that if Britain places limits on the free movement people it will lose its preferential access to the single market, leaving London-based international banks worried they could lose their right to sell services across Europe.
Denied
Japanese carmaker Nissan, whose Chief Executive Carlos Ghosn met May this month to discuss his concerns over Brexit, on Sunday denied a story in the Telegraph newspaper that it had decided to make its new Qashqai model in Britain.
Nissan’s CEO has warned he could scrap potential new investment in Britain’s biggest car plant unless the government pledges compensation for any increased tax costs resulting from Brexit.
Meanwhile, big international banks are preparing to move some of their operations out of Britain in early 2017 due to the uncertainty over the country’s future relationship with the European Union, a top banking official said.
Writing in the Observer newspaper, Anthony Browne, the chief executive of lobby group the British Bankers’ Association, said the public and political debate was “taking us in the wrong direction” and businesses could not wait until the last minute.
“Most international banks now have project teams working out which operations they need to move to ensure they can continue serving customers, the date by which this must happen, and how best to do it,” said Browne.
“Their hands are quivering over the relocate button. Many smaller banks plan to start relocations before Christmas; bigger banks are expected to start in the first quarter of next year.”
Many of the world’s major banks have their European headquarters in Britain, where the financial sector employs more than two million people and makes up almost 12 percent of the economy.
Banks in London depend on a European “passport” to serve clients across the 28-country European Union from one base and lenders worry that this right will end after Brexit.