The ABI welcomes the Government's announcement today on the direction it intends to take on the Controlled Foreign Companies (CFC) reforms following the consultation over the summer. This shows that the Government remains committed to making the UK tax system the most competitive in the G20, which will be a key driver for growth.
We are pleased that the Government has listened to the concerns of the insurance industry over the complexity of the proposals published this summer. The simpler approach adopted should make the reformed regime less burdensome to comply with and more certain in its application. The regime should be flexible enough to accommodate the specific features of insurance businesses. There is still much to work to do on the detail to ensure that the reforms are a success, not just for the insurance industry but for the competitiveness of the UK tax system as a whole, and the ABI will work with the Government to ensure this happens.
The insurance industry contributes over £10bn a year in taxes to the UK Exchequer despite competition from many locations around the world for insurance business. In the face of that competition, more insurers than companies from any other sector have had to redomicile from the UK to remain internationally competitive. The CFC regime is one of the main areas where the UK tax system still falls short, so its successful reform is a vital part of stopping and reversing that trend. Making the UK more competitive will encourage the growth of UK based insurers and, in turn, the contribution they make to the Exchequer.
"The UK's insurance industry is the third largest in the world and already contributes over £10bn a year in taxes to the UK Exchequers despite the competition from many locations around the world for insurance business. The announcement today is positive for insurers and, while there is much work to be done on the detail, once it is right it will make the UK a more competitive location for insurers which will be positive for both jobs and growth in the UK insurance sector."