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UK moves up tax competitiveness ranks

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The UK has moved from 3rd to 2nd position in the rankings of ten major countries’ tax systems, according to KPMG International in its biennial Competitive alternatives: focus on tax study.

The study assesses the general tax competitiveness of 107 cities in 10 countries, with a focus on 51 major international cities. The 10 countries examined are Australia, Canada, France, Germany, Italy, Japan, Mexico, the Netherlands, the UK, and the United States. The study compares the total tax burden faced by companies in each country and city including corporate income taxes, property taxes, capital taxes, sales taxes, miscellaneous local business taxes and statutory labour costs (statutory plan costs and other payroll-based taxes).

Among the countries studied, Canada has the lowest total tax index (TTI) at 53.6%, followed by the UK with 66.6%. This means that total tax costs in the UK are 33.4% lower than in the US, which has a TTI of 100 % and represents the benchmark against which all locations are scored. France is at the other end of the spectrum with a TTI of 163.3%.

The study was published as Frederic Donnedieu, chairman of Taxand, commented on the ‘global tax rate race to the bottom’ after the announcement that Spain was to reduce its corporation tax rate from 30% to 25%. Donnedieu pointed out that Japan, the UK and Greece were pursuing a similar agenda. He also referred to Taxand’s recent global survey of CFOs which revealed that 84% of respondents anticipated that tax competitiveness between countries would increase over the next five years.