Banking lobbyists have warned that UK banks currently face higher tax rates than international counterparts, and that these could hasten banks’ departures if they remain after Brexit.
Reuters reports that research commissioned by UK Finance and carried out by consultancy PwC shows London banks face an effective tax rate on profits of 50.6 percent, above the 43.8 percent in Frankfurt, and 34.2 percent in New York.
There is also a more than 20 per cent gap between London and the lowest taxers, Singapore and Dubai, at 23.2 percent and 22.7 percent respectively.
UK Finance chief executive Stephen Jones says: “At a time when domestic and international events are forcing many banks to restructure their global operations, it is important to consider the UK’s competitiveness relative to other leading financial centres.
“This report shows that the UK’s tax competitiveness has been substantially eroded relative to other financial centres to which globally mobile corporate and investment banks based here could relocate.”
Estimates have been made that around 10,000 bank jobs could head to Frankfurt, while the FCA has recognised that European bodies are actively trying to lure financial institutions to relocate in the wake of Brexit.