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Advertising Giant WPP To Return To UK

by Robert Lee,, London

04 September 2012

Advertising giant WPP is to move its headquarters back to the UK following changes to the taxation of foreign profits.

WPP chief Sir Martin Sorrell made the announcement as he released the company's latest figures. WPP has been headquartered in Ireland since 2008, where the corporation tax rate is just 12.5%. At the time, Sorrell blamed the move on the uncertainty surrounding the taxation of overseas profits.

When Chancellor George Osborne delivered his Budget in March, Sorrell hinted that WPP could make a return to the UK. He said that "corporately, the environment seems to us to have changed".

Osborne's business tax reforms do indeed appear to have lured Sorrell back. In particular, the decision has been influenced by changes to the taxation of overseas earnings by multinational companies. WPP's interim report states: "This will mean that, at least for the life of this government, there will be no tax cost to the Group by returning its Headquarters to the United Kingdom from Ireland."

The reforms will enter into force from next year. WPP's Board has already approved the decision and shareowners will be asked to consent to it at an EGM planned for early December, 2012.

While WPP's decision will be welcome news for the Chancellor, comments made by Sorrell on the latest coalition tax row will not. Sorrell has come down on the side of Deputy Prime Minister Nick Clegg who earlier this week recommended the introduction of an "emergency" wealth tax. Osborne shot down the calls, warning that the UK cannot afford to drive away wealth creators or business.

Sorrell has said that he "wouldn't be against" a wealth tax as proposed by Clegg. Sorrell has also described Osborne's lowering of the individual income tax rate from 50% to 45% as the coalition having "shot itself in the foot". He said that the best way to improve entrepreneurial activity would be to reduce capital gains tax, not "mess about with income tax".

Clegg is expected to unveil his proposals in full at his party's forthcoming conference.

TAGS: tax | business | Ireland | corporation tax | United Kingdom | corporate headquarters | multinationals | controlled foreign corporations (CFC) | tax rates | tax reform | individual income tax

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