Most UK Multinationals Would Support Foreign Dividend Exemption Impact Assessment

by Robert Lee, Tax-News.com, London

12 August 2008

A recent poll by PricewaterhouseCoopers LLP has found that more than three quarters (80%) of multinational companies in the UK would agree to providing information on their respective company affairs on an anonymous basis, as part of an impact assessment of the fiscal risk for dividend exemption.

Additionally, 90% were in support of a dividend exemption package, with 80% citing that they would see benefit in the government implementing a proposed dividend exemption in the Finance Act 2009, according to PwC's survey, which took place at the International Corporate Tax Association (ICTA) taxation of foreign profits seminar, London, on the 30 July 2008, an event attended by 120 tax directors from UK-based FTSE 350, FTSE Eurotop 300 multinationals and companies listed outside the UK.

The findings, announced by PwC on 7th August, came a fortnight after the government’s position statement proposing the ‘unbundling’ of the taxation of foreign profits (issued on 21 July 2008), raising questions as to whether the fiscal risk of introducing a dividend exemption, in the Finance Act 2009, would be too great.

Peter Cussons, tax partner, PricewaterhouseCoopers LLP, commented:

“One of the original objectives of the initial discussion was to address UK competitiveness. It remains the case that multinationals are still supportive of the introduction of a dividend exemption, and following the government’s recent response the only route to getting such an exemption in 2009 would be by offering evidence that the fiscal risk could be manageable.”

“PricewaterhouseCoopers would accordingly support business and government working together with a view to bringing in the dividend exemption as quickly as possible. Working with businesses would help to ascertain to what extent there would be an increased repatriation of both historic foreign reserves and future foreign profits, and the positive effect via repatriation of profits to the UK and any unwinding of upstream loans that this should have on the UK tax take.”

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