CioT and ICAEW call for offshore tax change

The Chartered Institute of Taxation (CioT) and the Institute of Chartered Accountants in England and Wales (ICAEW) have called on the government to change laws to let businesses bring offshore gains into the UK tax free.

In an open letter to Jane Kennedy, the Treasury's financial secretary, the two institutes said that the government should introduce "the long-awaited dividend exemption" and then consider "worldwide interest restrictions".

They added that the dividend exemption should be put into place from April 1st 2009.

The letter explained: "We recommend that the government do not introduce a dividend exemption with transitional restrictions, as this would limit the benefit to the UK of repatriation and cause major compliance problems.

"We further recommend that, as a separate exercise, the government conduct a wide-ranging consultation in respect of the UK tax base - and announce this as soon as possible."

Website accountancyage.com reported that the government and other taxation policymakers have been concerned that the dividend exemption might entice businesses to "pass 'passive' income from assets such as intellectual property through controlled foreign companies in low tax jurisdictions".