Will the UK cut corporation tax in a bid to stay competitive with the US?

In an interview with International Business Times this week, Stephen Herring, Head of Taxation at the Institute of Directors said that, in a bid to stay competitive with the US, he predicts the UK will cut corporation tax to 15 per cent if President-elect, Donald Trump, goes ahead with his promise to cut US corporation tax from 35 to 15 per cent.

“The Labour, Coalition and Conservative governments have all focused on having a highly competitive low corporation tax headline rate, because that is probably the one thing above all that foreign direct investment by multinational companies focuses on,” Stephen said.

He went on to say that the government “will look at what happens across the pond and I would be very surprised if the US rate is reduced that they wouldn’t copy that rate. Probably the most likely rate is 15 per cent.”

Last month Chancellor Philip Hammond said his predecessor George Osborne’s plan to cut corporation tax to 15 per cent was merely a suggestion, saying that the current rate of 20 per cent was “highly competitive” and the government’s plan to cut the levy to 17 per cent by 2020 will still be “more attractive”.

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