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UK to have 'lowest corporation tax in G7'

Wednesday 23 March 2011 - by Will Henley

UK chancellor George Osborne has unveiled plans to slash the country's corporation tax from 28 to 23 per cent by 2014.

The finance minister, announcing the annual Budget on Wednesday, said the reduction would give Britain "the lowest corporation tax in the G7".

Osborne said that the tax would be cut this year by 2 per cent, up on the 1 per cent already announced by the government.

"It will continue to fall by one per cent in each of the following three years right down to 23 per cent - 15 per cent lower than America, 11 per cent lower than France, seven per cent lower than Germany."

"Britain is open for business," the chancellor of the exchequer said.

Osborne added however that the country's banking levy would be adjusted to ensure that banks do not benefit from the cut.

The government will also introduce new rules that effectively apply an "ultra-competitive" 5.75 per cent rate on overseas financing income, he said.

"This will give us a far more attractive system than France, America or Germany. I want Britain to be the place international businesses go to, not the place that they leave."

The finance minister said that the country's tax policy should support growth and "be certain and predictable". It should also be "more competitive", he said.

"Let's face facts. Other countries are quite deliberately are making their systems more competitive and attracting multinational companies away from the United Kingdom."

"We could stand there and do nothing but increasing the living standards of every family in the country depends on keeping companies - and the jobs and the investment and the tax revenues that come with them - here in the United Kingdom."

In a major drive toward simplification, Osborne said he would remove a hundred pages from the country's tax code. He said the reforms would make the system "fit for the modern age".

"Here's the truth: Britain used to have the third lowest corporate tax rate in Europe. It now has the sixth highest.

"Our tax code is so complex that it recently took over India to become the longest in the world."

He added that the government would fundamentally reform the "complex" rules for control of foreign companies "and make them more territorial".

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