The UK government has plans in place to begin taxing non-doms – or non-domiciled residents in the UK who earn an income abroad and therefore pay no taxation on such income in the UK. Long considered an excellent location for international trade and business as a result of its favourable taxation treatment of non-domiciled individuals, the expatriate tax saving advantages in the UK are now under threat.
The short sighted and extremely damaging Labour plan in a nutshell is that anyone non-British domiciled but resident in the nation for seven years or more will pay a flat fee of GBP 30,000 to retain their tax efficient status. Naturally enough there are many individuals up in arms about this – but international companies who send workers to the UK are also upset at the plans as is the British maritime industry…now leading voices in the worlds of business and finance are vociferously lobbying the government to amend their damaging plans.
It is estimated that the government’s proposals to enforce a fee of GBP 30,000 on any non-domiciled individuals who are able to live tax free in the UK and who have done so for seven years or more will raise in the region of GBP 650 million annually. However, as has now been pointed out to the government by the likes of Digby Jones who’s the trade and investment minister, if they go ahead with their plans then international companies already established in the UK will consider relocating – with the likes of Paris and Frankfurt already gearing up for their arrival – international individuals will leave the UK, sell their properties and remove their assets from the nation and the UK will no longer be considered an attractive location for anyone successful to reside in!
The trade and investment minister is not the only one to complain, international chambers of commerce have been quick to tell the British government how much they will lose when their members withdraw from the UK, and the shipping industry in the UK has said that the proposals actually undermine the entire services sector of their industry which is worth GBP 1.5 billion. The Baltic Exchange,Chamber of Shipping, Maritime London and the Joint Hull Committee have banded together and told the government that international companies in their industry will move abroad if the expatriate tax saving benefits are eroded by their flat fee plans.
The government is quite simply sending a message that says international companies and their employees are no longer welcome – and some might say ‘fair enough’ – if these people and entities don’t pay income tax we don’t want them. But what about the stamp duty and council tax they pay on their homes, what about the tax they pay on any income or money they remit to the UK, what about the tax they pay as a result of running a car in the UK and what about the money they put into the economy simply by being an affluent consumer in British society? And all that fiscal benefit aside – what about the fact that the majority of these individuals are employed in roles that benefit the UK economy in other ways? Surely the Labour government can be a little less short sighted in this matter? Does it really want to ruin the excellent reputation that our nation has as an international fiscal and business centre of note?
The bill and the senators’ policies are pretty harsh – they want offshore tax havens used by America’s most wealthy to come under the same scrutiny and face the same penalties as centres identified as money laundering locations. And yet, offshore centres offering companies and individuals the ability to create taxation avoidance schemes are simply offering a more advantageous business and investment climate than the US. Aiding and abetting money laundering and offering a low tax environment are hardly in the same ball park let alone similarly punishable offences.
The US needs to ensure it doesn’t over react and isolate itself internationally in terms of its popularity any more or push its more affluent and successful citizens overseas and lose out on all their taxation revenue…