New tax consistency ‘will boost London as a hub’

London’s international standing will be significantly boosted by plans to end taxation of profits on UK firms’ foreign branches, the ABI says.

Under current rules, profits from foreign branches are taxed as part of the total profits of the UK company, while profits from separate trading subsidiaries in foreign countries are exempt from UK tax.

The move is aimed at boosting UK competitiveness and achieving greater consistency of tax treatment.

The government has issued a consultation paper with a deadline of 15 October for responses.

“These reforms will make it easier and clearer for UK-based firms to bring profits earned abroad back to the UK, and will significantly boost London’s international standing,” ABI acting director-general Maggie Craig said. “They should encourage more firms to use the UK as the hub for their European operations and will bring the UK more in line with other centres.”