May criticised for 'unlimited tax dumping'

May criticised for 'unlimited tax dumping'

German MEP Sven Giegold has rounded on Theresa May for pledging to give Britain the lowest rate of corporation tax in the G20 post-Brexit, saying it amounted to "tax dumping".

Mr Giegold, who is the financial and economics spokesperson for the Greens/European Free Alliance in the European Parliament, called for an agreement on minimum tax rates post-Brexit.

He accused Mrs May of "misleading" other EU nations on the low levels of tax already levied on UK companies.

The criticism comes after a speech by Mrs May at the Bloomberg Global Business Forum in New York, where she had pledged to levy businesses the "lowest rate of corporation tax in the G20".

Mr Giegold said: "The exit from the EU must not provide a carte blanche for unlimited tax dumping.

"Tax policy now has to be at the heart of the Brexit negotiations. Any possible post-Brexit trade agreement should include minimum tax rates. A huge low tax zone in the EU’s immediate neighbourhood cannot be accepted.

“Theresa May must not be allowed to mislead us: already today, companies in Great Britain pay the lowest tax rates of all G20 member states. Even as a member of the EU, Great Britain is already depriving other EU countries of tax revenue."

Speaking at the Bloomberg Global Business Forum in New York, Mrs May had said: "Crucially we have a plan to deliver an economy that is knowledge-rich, highly innovative, highly skilled and high quality but with low tax and smart regulation.

"So let me say this very clearly. Whatever your business, investing in a post-Brexit Britain will give you the lowest rate of corporation tax in the G20."

The corporation tax main rate in the UK is 19 per cent, due to fall to 18 per cent in April 2020. This is higher than Germany's main rate of 15 per cent.

However, once all forms of corporation income tax, including trade tax and surcharges, are factored in, the UK undercuts many of its European neighbours. 

Mr Giegold also called on Britain to tighten its rules on non-domiciled wealthy people.

He said: "Against resistance from the German government, Great Britain also offers a generous patent box to further reduce tax rates. Britain allows hundreds of thousands of immigrants from the EU not to pay taxes on foreign income and treats them better than British citizens. The 'non-dom privileges' for wealthy foreigners should be abolished."

Jon Bean, chartered financial planner at Eldon Financial Planning, said lowering corporation tax was only one part of attracting business.

He said: "Low corporation tax is of course attractive, but whether it will be enough to attract business and investment to the UK is another matter.

"There is a lot of talk but very little substance about what the environment will be like after Brexit, and it would be good to have some solid answers to questions about workers’ rights, trade agreements and so on before the impact of low corporation tax rates can be gauged."