The Confederation of British Industry (CBI) has launched a wide-ranging review of Britains corporation tax regime, arguing that tax planning in its present state harms companies competitiveness.
The CBI has created a "Tax Task Force", reports Reuters, bringing together the leaders of several firms including Cadbury Schweppes and Barclays. Tax experts will also be involved as reform possibilities are discussed.
Richard Lambert, director general of the CBI, highlighted previous research which showed that 20 per cent of UK firms had relocated some of their activities overseas last year because of tax issues.
Offshore company formation seems set to increase further if the corporation tax regime is not reformed. Mr Lambert emphasised: "Companies have a lot more choices than they used to have. The time has come for a more strategic, coherent and forward-looking approach.
"There needs to be a healthy and sustainable flow of business taxes: the current tax rate is not sustainable. Either the rate will go down or companies will make their profits elsewhere."
The Task Force, to be led by CBI chief economic adviser Ian McCafferty, will publish its report early next year.
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