International companies are still keen to base their businesses in the UK, in spite of the proposed increase in corporation tax.

This has been shown by Shell recently announcing it is planning to move its tax residence to the UK, as the country has a lot of benefits for global enterprises, reported Money Marketing.

However, one deterrent is the prospective increase in corporation tax from 19 per cent to 25 per cent from April 2023.

While the corporation tax rate was changed to 24 per cent in 2010 following the financial crisis, it was dropped to 19 per cent in 2017, which it has remained at ever since.

Therefore, this six per cent hike is quite significant and could deter companies using the UK as a location for their business.

This would be the case if there were not other benefits to being based here, as the publication recognises, stating: “Despite the proposed future increase to corporation tax, the UK remains a strong location for international corporates to locate.”

For instance, businesses are drawn to the UK because of the language, time zone, law system, employment law, large workforce and strong work ethic.

In addition to this, there is the financial advantage that there is no tax on profits repatriated to shareholders or parent companies. Britain also enables withholding tax rates to be reduced or exempt under treaty terms, thanks to its network of double tax treaties.

Businesses must pay corporation tax on profits if they are a limited company, a foreign firm with a UK branch or office, or another type of association. Taxable profits include investments, selling assets for more than they cost, and trading profits from doing business.

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