American companies are flocking to the United Kingdom for lower taxes, as Britain is using its lower taxes rates to aggressively court multinational firms from around the world.
The United States is the largest potential goldmine of companies that might relocate to Britain, the Financial Times reported, even though the Internal Revenue Service tightened regulations to make it harder for companies to relocate headquarters overseas.
David Gauke, a British Treasury minister, praised the benefits of his country's new lower tax rates last month in Washington in what the Treasury called "an unashamed bid to promote the U.K. to U.S. businesses," according to the Times. Gauke talked to companies like Seadrill, an offshore drilling company, which might move its headquarters out of Norway.
Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation
Britain reformed its corporate taxes after a string of corporations left the country in 2008, the Times noted. The country will cut the corporate tax rate to 22 percent in two years, cut taxes on patent income and ease rules on foreign profits and tax-deductible interest costs.
The low-tax strategy appears to be winning. Ernst & Young told the Times that at least 20 corporations plan to move regional or global headquarters to Britain. Those relocations will create about 2,000 well-paid jobs and produce several hundred millions of pounds in tax revenue.
Companies that have already relocated their global headquarters to Britain include insurers Aon and Lancashire Holdings, drilling contractors Ensco and Rowan and vehicle component manufacturer Delphi Automotive.
Those big companies are the just "the tip of the iceberg," John Dixon, Ernst & Young’s head of U.K. tax, told the Times, saying relocations of many regional headquarters go unpublicized.
Following Britain's tax cuts, Sweden announced it will cut its corporate tax rate from 26.3 to 22 percent starting next year, MarketWatch reported.
"This is to improve the conditions for new jobs and investments in Sweden," the Swedish government stated. "The significant lowering of corporate tax is expected to strengthen the investor climate and growth in Sweden."
The average corporate tax rate in the European Union is 23.4 percent.
"With the proposed change Sweden would therefore land below the EU average," the government said, according to MarketWatch.
Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation
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