UK budget cuts luring back firms
The British Chancellor’s budget tax cuts for businesses received early endorsement today after advertising giant WPP today said it was likely to switch its headquarters back to the UK.
WPP boss Sir Martin Sorrell revealed that George Osborne’s announcement yesterday of a greater-than-expected reduction in corporation tax and reforms to levies on profits collected overseas had tempted the firm to reverse its move to Ireland.
Martin told BBC Radio 4’s Today programme: “There has to be legislation enacted ... but I think it looks as though we will make that recommendation (to return to the UK).”
The news comes a day after business publisher and events organiser United Business Media said it was “actively considering” a return to the UK three years after moving its tax base to Ireland.
Onerous tax charges on profits earned outside the UK have seen a number of British firms quit the country in recent years.
WPP relocated its HQ to Dublin in late 2008, while office group Regus and pharmaceutical firm Shire have also joined the exodus.
Mr Osborne unveiled moves in yesterday’s budget to woo businesses back to the UK by increasing this April’s cut in corporation tax to 2% instead of 1%, alongside a commitment to overhaul controlled foreign company rules.
Corporation tax will now be reduced by 5% over the next four years, from 28% to 23% – making it the lowest rate of the G7 nations.
Martin said that together with the firm’s chief finance officer he would propose to his company’s board that WPP return to the UK.
If agreed by both the board and then shareholders, the switch could take place soon after legislation later this year or early in 2012.
Robert Gray, chief financial officer at UBM, gave similar backing to Mr Osborne’s plans.
He said: “In the light of the reform proposals, UBM is actively considering whether to relocate its corporate tax domicile to the UK.
“Once we have reviewed in full the details of the proposed changes to the corporate tax regime, UBM’s board will consider the issue. As always, the interests of UBM shareholders remain paramount in our consideration of these issues.”
