Lexpert Magazine

April/May 2017

Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.

Issue link: http://digital.carswellmedia.com/i/808422

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Page 30 of 71

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

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