Scotland: corporate tax rate cut and other tax incentives

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sign-43865_640On September 18, 2014 voters in Scotland will go to the polls for a referendum that will shape the future of the UK. What will be the consequences of the positive vote on tax policy and tax law of Scotland? The Scottish Government’s white paper on independence, published in November 2013, set out plans to design a more effective tax system tailored to Scotland’s specific requirements. The most recent report proposes a long-term plan which could see a tax rate cut by 3%, should Scotland become independent. The Government claims that corporate tax rate cut by 3% (which will be 17% accordingly) could help counterbalance the ‘economic pull of London and the South East’ and boost employment by approximately 27,000 jobs. Other tax incentives such as national insurance reliefs for employers, the introduction of more effective capital allowances to encourage investment, and tax credits for research and development activities are also on the list. Finance Secretary in the Scottish Government John Swinney says: ‘It is widely agreed that too many jobs are concentrated in London and the South-East of England. So we need the powers of independence to give businesses in Scotland a competitive edge and the incentives to create more and better jobs here in Scotland’.