UK’s Gauke Defends Tax Decisions In Washington
David Gauke, the Financial Secretary to the UK Treasury, has spoken out in support of the international tax measures being adopted by the UK, and pushed the idea of diverted profits taxes.
Speaking at the American Enterprise Institute in Washington DC on September 29, 2015, Gauke said recent reforms have resulted in more inward investment and jobs for the UK; have built a stronger, open economy; have increased public confidence in the tax system; and have brought benefits for businesses.
Gauke said that a low corporate tax rate is a key feature of the UK’s new regime, alongside a wide range of measures that the Government is putting in place to make the UK internationally competitive. Gauke said that the Government has introduced specific tax measures, including a patent box regime and “above the line” tax credit for research and development, and has modernized the country’s controlled foreign corporation regime.
Gauke said the “[Government’s] ambition is simple: an international system with coherent rules that ensures all companies pay their share – and that isn’t open to abuse.” He added that “the UK is not a jurisdiction which offers preferential deals,” adding that “it is possible to enter into advanced pricing agreements, but these are based on a fair and consistent application of the law.”
Gauke said: “Our tax policies stem from a very simple belief: that a low-tax and an efficient-tax economy are fundamental to growth, and that you can only get a functioning low-tax economy if you collect the taxes that are owed. We believe that this is what helps businesses prosper: the competitiveness of low taxes, and the certainty of having a properly working tax system in place.”
“These are the two principles of taxation in the UK – and together, I believe they help make the UK one of the best places to do business in the world,” Gauke added.
Gauke said: “The OECD is due to report the final BEPS outcomes to G-20 Finance Ministers at their meeting next week. Significant progress has already been made. We now have an internationally agreed template for businesses to report to tax authorities where they pay tax and where they make profits. This is a good initiative which will increase transparency – we strongly support it.”
Gauke noted that the recently introduced 25 percent Diverted Profits Tax is “not an attempt to tax profits that have been taxed elsewhere,” but “it is simply a tax designed to ensure fairness, and one which sends a powerful worldwide signal that we take this seriously – helping us lead the international debate.”
Gauke said: “We will always be on the side of competition between countries. Our measures back that up. But we will be equally firm in demanding that that competition is fair and transparent. We take this seriously – because a stable, functioning tax system depends on everybody playing by the rules, and because operating in a system where the rules are clearly defined gives certainty to shareholders and investors. Sticking to the rules benefits everyone concerned.”
