Budget 2012: UK Jumps Up the EU’s Corporate Tax Rate Rankings As Headline Rate Cut to 24 Percent

Michelle Remo, “Big 4″ observer
March 23, 2012 /

The announcement that the UK’s headline rate of corporation tax will drop to 24 percent in April takes the UK from having the joint 19th highest rate in the European Union to 15th, according to KPMG in the UK. The headline rate is currently 26 percent.

It was slated to drop to 25 percent and today the Chancellor has announced it will reduce to 24 percent in April 2012.

Chris Morgan, head of tax policy at KPMG, said:“Today’ s corporation tax rate cut takes us from joint 19th highest in the EU to 15th, leapfrogging Finland, Portugal, Denmark, Austria and the Netherlands (a key competitor on tax).

“It also puts us below the global average rate of around 24.5 percent. Corporates will welcome today’s reduction but some businesses involved in capital intensive infrastructure industries will be disappointed to emerge empty-handed from the budget as they had been hoping for some targeted infrastructure investment allowances.”

Malta operates a full imputation system of taxation for both residents and non-residents, which ensures the full relief of economic double taxation upon the distribution of taxed profits by companies resident in Malta. On the distribution of taxed profits, the shareholders may opt to claim a partial/full refund of the tax paid by the distributing company.

As a general rule, the tax refund amounts to six-sevenths of the tax paid. The refund will be reduced to two-thirds if the shareholder claims double-taxation relief and five-sevenths in those cases where the distributed profits are derived from passive interest or royalty income being subject to foreign tax at less than 5%. Dividends and capital gains derived from participation holdings will qualify for a full refund.

The Malta tax suffered on distributed profits hence ranges between 0% and 10%. The tax paid on profits derived, directly or indirectly, from immovable property situated in Malta is not available for refund.


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