Study shows UK corporation tax remains high

Date: 10th September 2008

Corporation tax in the UK remains higher than in most European countries, a new report has suggested.

The latest KPMG Global Corporate and Indirect Tax Rate survey showed that UK now has the 19th lowest corporate tax rate of the 27 EU member states - a slight improvement on last year's position of 21st.

According to the figures, the average rate of corporation tax in EU countries now stands at 23.2 per cent.

"Tax does play a role and its importance was highlighted recently with more companies announcing their intentions to relocate their headquarters outside the UK," Chris Morgan, head of international corporate tax at KPMG in the UK, explained.

Interestingly, the study showed that while businesses in the UK pay more corporation tax than their European counterparts, they pay fewer indirect taxes - such as VAT.

The report's authors suggested that this could be why the UK was voted the best country in the world to deal with from an indirect tax perspective in a recent KPMG survey.

"More and more governments are introducing indirect tax systems," Sue Bonney, head of tax at KPMG Europe, added.