A Competitive and Modern Tax System for Multinationals and Large Business

REV 2 7 March 2001

A COMPETITIVE AND MODERN TAX SYSTEM FOR MULTINATIONALS AND LARGE BUSINESS

The Government is committed to further reform of the company tax system to ensure long-term stability and strengthen the competitiveness of business, the Chancellor confirmed today. Three strands will be taken forward to secure a competitive environment for business that, with globalisation, can change very quickly:

• A consultation paper will be published in June that will set in a

broader context the current proposals for a relief on gains arising on the disposal of substantial shareholdings. Considerable progress has been made on developing this relief. The further consultation will allow consideration of detailed proposals. It will also provide the opportunity to consult business on possible associated reforms aimed at producing a flexible and competitive tax system for parent companies based in the UK;

• A new technical note published today by the Inland Revenue gives

details of a proposed new regime for providing relief to companies for the costs of intellectual property, goodwill and other intangible assets. The technical note builds on earlier detailed discussion with business on the design of a more up-to-date regime, and includes draft legislation.

• The changes to the regime for double taxation relief (DTR)

announced in the Pre-Budget Report will be supplemented by further measures to make the system more flexible for UK-based parent companies. The Government has consulted further with business about the DTR regime over the last year and intends that this dialogue will continue, both on specific aspects and to ensure that the DTR regime fits with other elements of the system for taxing companies.

1

Commenting on these announcements, the Paymaster General, Dawn Primarolo, said “These take forward the Government’s reforms of the company tax system, and the consultation we now propose offers business an excellent opportunity to shape the...