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The UK’s tax competitiveness has improved the most for business among major economies over the past two years, according to a study.
The country ranks six out of 14 worldwide, ahead of the US and all European countries analysed, with its score having been enhanced by almost 15 percentage points since 2010, analysis by KPMG shows.
The research took a selection of business levies, including capital taxes, sales taxes and property taxes, to calculate a total tax cost, which was compared between locations using the total tax index (TTI) for each location.
TTI is KPMG’s measure of the total taxes paid by corporations in one nation or city, expressed as a percentage of total taxes paid by corporations in the US – which is given a TTI of 100 that represents the benchmark against which all other locations are scored.
The lower the score earned, the more attractive a country is from a business tax perspective. With a TTI of 73.3, compared to 88 in 2010, the UK ranks immediately above the Netherlands (77.2), and has a fewer points than Germany (122), Japan (152.3) and France (179.7) among others. India, a new entrant, tops the chart with a TTI of 49.7.
Within the UK, Manchester is judged to be more appealing to business than London. The northwest city was given a score of 66.8, 13 lower than that received by London, largely as a result of rates for “other corporate taxes” and “statutory labour costs”. None of the country's other cities were analysed.
Chris Morgan, head of tax policy at KPMG, said the results – contained in the document Competitive Alternatives 2012, Special Report: Focus on Tax – are “good news for UK plc, and an endorsement of the government’s tax policy”.
He added, “The significant change for the better is partly due to reductions in the corporate income tax rate… It is also due to lower industrial property values in 2012, which have resulted in a reduced burden for other corporate taxes.”
