Rishi Sunak says UK still attractive for business, despite tax rise

Business groups and chancellor's own party attack over corporate profit tax

Britain's Chancellor of the Exchequer Rishi Sunak attends a virtual press conference inside 10 Downing Street in London, March 3, 2021. AFP / POOL

Chancellor Rishi Sunak said he was confident the UK would remain an attractive place to do business after his plans to raise taxes on corporate profits were attacked by business groups and members of his Conservative Party.

Britain will still have one of the lowest corporation tax rates among Group of 20 nations, Mr Sunak told the cross-party treasury committee on Thursday.

Businesses would also factor in a full range of taxes and relief, as well as skills, infrastructure, and research and development incentives.

“If you look at the shop window as a whole, there are lots of things in there, lots of goodies that will just make sure that this is a really attractive place to come and do business,” Mr Sunak said.

“I’m confident that will be the case, even at a slightly higher rate.”

Increasing the main rate of corporation tax to 25 per cent in 2023, from 19 per cent, was the centrepiece of a budget last week that sought to plug the hole in public finances left by the pandemic.

The increase, if introduced, would be the first since 1974.

George Osborne slashed corporation tax as Tory chancellor between 2010 and 2016.

Mr Osborne aid this week that Mr Sunak’s move sent “a message around the world that Britain is not a particularly enterprising or pro-business place” at a time when investment is needed after Brexit and the coronavirus pandemic.

The Confederation of British Industry said the rise would “cause a sharp intake of breath for many businesses and sends a worrying signal to those planning to invest in the UK".

Mr Sunak also suggested he may publish new fiscal rules to guide his tax and spending decisions towards the end of the year.

He said the rules were likely to seek a balanced budget on day-to-day spending, a stable or declining debt burden and something around the affordability of debt repayments.