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Company formations may increase after it was announced today that British companies could soon be able to repatriate foreign profits free of tax.
The Treasury said that it was considering such a move but that a tax cut would probably be countered by the closure of a number of loopholes.
The move would bring Britain in to line with the rest of Europe, where foreign dividends are not taxed and the proposals are expected to be welcomed by a number of major businesses, who have been campaigning for such a move for years.
Among the concerns regarding the proposals is a fear that too many firms will look to borrow in Britain before investing in countries with lower taxes, resulting in tax planning leakages.
"Any changes would be revenue neutral," a source from the Treasury said.
"There are ongoing discussions which have been written about (for some time)."
A consultation paper is now set to be issued over the coming weeks.
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