LEXPERT MAGAZINE
|
APRIL/MAY 2017 31
THERE'S LITTLE DOUBT that heightened international tax competition
would have enormous implications for this country — and, indeed, the
games seem to have already begun. e United Kingdom's corporate tax
rate, which was 28 per cent in 2010, now stands at 19 per cent and is set to
drop to 17 per cent by 2020.
In the United States, meanwhile, President Donald Trump was elected
on promises that included lowering the equivalent tax rate there to about 20
per cent (a figure that includes state taxes) from its current 39 per cent. at
number means that businesses in the United States are among the highest
taxed in nations with advanced economies, apart from Japan. Not to be out-
done, UK Prime Minister eresa May then told the Confederation of Brit-
ish Industry that her "aim" was to maintain the UK's status of having the
lowest corporate tax rate in the G20 — implying that she was prepared to
continue lowering tax rates if necessary to remain competitive.
"e UK has lowered taxes and we're going to see tax reform of some kind
in the US as well," says Claire Kennedy, a tax partner in the Toronto office
of Bennett Jones LLP. "Any cut in the corporate tax rate in the US, whatever
form it takes, will be a challenge because we're a small, open economy that
is very close geographically to the US but has still managed to enjoy an eco-
nomic advantage because of our lower corporate tax regime."
It's not, however, as if Canada, with its corporate rate averaging between
26 and 27 per cent (depending on the provincial portion), has the lowest
corporate taxes in the world: a PwC report published in January puts the av-
erage for OECD countries at about 24 per cent. Still, the country has come a
TAX
COMPETITION
RETURNS
The tax advantage
enjoyed by Canadian
businesses has been
part of the attraction
for US investors.
While predictions
are impossible to nail
down in the current
political climate,
certain opinionists
are suggesting that
may change. Tax lawyers
have learned to wait
and see BY JULIUS MELNITZER
COVER STORY