The tax rate paid by the FTSE 100 companies has fallen by a third since 2009, research by accountancy firm UHY Hacker Young has revealed.
The average tax rate paid by the companies is currently at 24.5% compared to 26% in 2012 and 35.8% in 2009.
Hacker Young’s study shows that that the fall in tax rate is due the FTSE 100 companies raking in more profits overseas than in Britain.
The report also found that more than 20 companies left the UK for tax reasons between 2007 and 2011, and very few have returned.
Roy Maugham of UHY Hacker Young said: “Companies have a duty to their shareholders to keep costs low, and tax payments are a major cost. Companies are always exploring ways to make their tax payments as efficient as possible, which has helped chip away at their effective tax rates.
“Companies have also been given a hand by governments around the world. International competition to attract corporate tax revenues is as fierce as ever, with countries offering new enticements to businesses in the form of allowances, reliefs, or tax cuts. This means the overall FTSE 100 effective tax rate is pushed lower and lower.”
The UK has followed the trend, with the coalition government reducing corporate tax rates from 28% to 24%. It plans to further reduce this to 21% by the next election.
The report’s findings are based on an “effective tax rate”, calculated based on the value of a company’s global taxes charged as a percentage of global profits.
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