The Chancellor will allow input from the new mulinational finance forum before he decides on the foreign profits tax.
Chancellor Alistair Darling has agreed to back down on proposed changes to taxation of foreign profits and give the new forum of multinationals – which includes Nicolas Moreau, chief executive of AXA UK – direct input on the issue.
The government’s consultation on foreign profit tax was originally due next month. But this week it was reported that the consultation will be delayed. Legislation to enact any changes is now unlikely to come into force until 2010, which is the expected year of the general election.
The business-government forum was originally meant to address long-term tax issues, and was not intended to be a substitute for consultation on the foreign profits regime. But the Treasury has now confirmed that the working group will play a leading role in the foreign profit proposals.
The decision to give the forum more power follows growing criticism from companies such as Brit Insurance and Amlin who threatened to redomicile.
‘ See page 14 for a more in-depth look at tax threats to insurers.