Tax system too unstable says de Castries

AXA boss Henri de Castries has attacked the UK’s tax system, which he says is too unstable to rank among Europe’s most competitive tax regimes.

De Castries, chairman of the management board and chief executive of French insurer AXA, said the UK was well placed by having a general level of taxation lower than some other European countries, including France.

But he said: “The things that are important for long-term investors in markets are the absolute level of taxes, but also the stability of the system. And in the UK, with the caution of an outside observer and all respect to the government there, it’s terrible.”

Speaking at a recent media seminar near Bordeaux, de Castries said that within Europe, the UK had a comparatively low tax rate of 28%.

But with constant proposals and U-turns affecting the system, such as ongoing concern over the possibility of taxation on excessive reserves as well as foreign profits, de Castries said the UK’s tax package as a whole has lost its edge.

“The UK tax system changes perpetually, which makes the system largely difficult to understand. By doing that you’re destroying the competitive advantage of having a lower tax rate than other places,” he said.

De Castries claimed that a non-competitive tax environment was the reason that no big non-UK player had bought a UK company over the past year.

He said: “When I started in business 19 years ago, the British companies were dominant forces in the insurance sector. Today, you don’t have any UK company in the top 10 worldwide. It’s not because you don’t have competent management teams, it’s just because regulation has changed so many times. It’s less and less attractive.”

But he added that while AXA had no interest in buying Churchill and Direct Line from RBSI, it remained interested in UK acquisitions on the distribution side, as demonstrated by its purchase of online motor insurer Swiftcover last year.