UK Government To Deepen And Speed Cuts In Corporate Taxes

In a move to make the U.K. more competitive for businesses, the British government Wednesday said it would deepen and accelerate a planned cut in corporate tax and would push ahead with plans to change the taxation of profits earned overseas by British businesses.

U.K. Chancellor of the Exchequer George Osborne told lawmakers that U.K. corporate tax would now be cut to 23% by 2014 from 28% currently, a move he said would give Britain the lowest rate in the G7. The reduction will be involve a 2% cut from April 1, and a 1% cut at the same time each year until 2014.

Previously, the government had planned to cut the rate to 24% by 2014.

"Let it be heard clearly around the world - from Shanghai to Seattle, and from Stuttgart to Sao Paolo: Britain is open for Business," Osborne shouted as he announced the changes in his annual budget to lawmakers.

The move, along with measures to change the taxation of foreign profits of U.K. businesses and a reduction in the tax rate on overseas financing income, comes after several high profile British companies moved overseas in recent years, citing an unfavorable corporate tax regime in the U.K.

Advertising giant WPP PLC (WPP.LN) moved its base to Ireland which has a corporate tax rate of 12.5%, and it was joined by pharmaceuticals company Shire PLC (SHP.LN) and United Business Media PLC (UBM.LN). Others moved to Switzerland and the Netherlands.

"I want Britain to be the place international businesses go to, not the place they leave," Osborne said.

WPP, United Business Media and Shire weren't immediately available to comment on the impact of the taxation changes on their business.

-By Steve McGrath, Dow Jones Newswires; 44-20-7842-9284; [e-mail]