Tax experts: Post-Brexit scene to be more competitive

Jonathan Burt

The British Business Association of Macao (BBAM) held a business breakfast meeting yesterday morning at the St. Regis Macao, where senior tax consultant for The Fry Group, Jonathan Burt, explained likely scenarios for the future of Britain’s taxation policies in light of the country’s June 23 decision to exit the European Union.

As Britain’s Supreme Court recently ruled that triggering Article 50, the formal process by which an EU member state irreversibly heads for the exit, cannot be the decision of the government alone, Burt warned that the forecasts made by The Fry Group may never come into force.

Speaking to the Times on the sidelines the event, Burt and his colleague Justin Davies, who is a senior financial planner at the group, nevertheless said that should ‘Brexit’ occur, they do not think an exodus of workers is a likely scenario, adding that it would be “a bad decision”.

As such, government revenues from income tax and value-added tax are equally unlikely to diminish in the short term.

Nevertheless, Burt explained the group’s predictions that the British government would attempt to make foreign investment in the country more attractive for those overseas – probably by way of a reduction in corporate taxation.

Corporation tax which “used to be set at 28 percent, should be falling down to 17 percent in three or four years’ time,” explained Burt.

Davies also remarked on the possibility of Ireland benefiting from Britain’s departure from the EU, considering that the former country already offers competitive rates of corporation tax and is well-suited to ‘take-over’ from Britain given that it is an English-speaking country within the EU.

“If you’re a large corporation and want [to establish] European headquarters […], would you set it up in London or the U.K.? Not today you wouldn’t. And if you had to go ahead and do that – to take advantage of the European market – then Ireland could be a good choice. And again, [corporation] tax rates are pretty reasonable,” rationalized Davies. “I’m sure that they would be competitive.”

The talk was specifically geared toward British citizens living abroad in locations such as Macau, Hong Kong and Singapore, and according to organizers would be informative for those who are intending to return to the U.K. in the coming years.

BBAM chairman Henry Brockman raised the example of executives and consultants within the local construction sector during the event. He said that, with fewer large-scale projects now on the horizon in the MSAR, British workers in that field might consider relocating back to Britain.