Written question asked by Lord Kilclooney (Crossbench), in the House of Lords. It was answered by Lord McKenzie of Luton (Labour) on Wednesday, 26 April 2006.

Taxation: Corporation Tax

Question: Whether any nation in the European Union has more than one rate of corporation tax in its sovereign territory; and whether consideration will be given to implementing a system of different corporation tax rates in the various regions of the United Kingdom.

Answer: In certain circumstances, some member states have more than one rate; for example, some have state aid agreements leading to more than one rate, and others have territories and dependencies that have their own rates. Our corporation tax regime is a UK-wide system, and introducing different rates in different parts of the UK could distort competition. It would also result in a system that would place a significant administrative burden on businesses and on the Government. Many companies trade in different regions of the UK, and it would not be easy to determine which proportion of their profits was liable at which rate. In addition, such a measure could also create opportunities for some companies to manipulate the rules simply to benefit from a lower rate.

Secondary information