The British Private Equity and Venture Capital Association has criticised tax proposals in the Chancellor’s Pre-Budget Report.”With the financial services sector in virtual meltdown, international competitiveness is more important than ever,” says Simon Walker, BVCA chief executive. “The proposed increases in national insurance from 2011 – and a top tax rate of 46.5% – make the combined tax take on higher incomes 60% of salary. This will inevitably provide a disincentive for international investors to base their businesses in Britain. The UK’s increased tax complexity and waning competitiveness will rebound to the benefit of the UK’s rivals, like Switzerland, Ireland and, increasingly, the Middle East.”
However, the BVCA is not completely opposed to the Report and supports the government’s acceptance of recommendations to allow more small and medium-sized businesses to compete for public contracts.
“A number of other modest measures, including the ability to carry back losses for three years, will help small firms including venture capital-backed companies – and we believe the detail of the budget may end up enhancing the Enterprise Investment Scheme,” says Walker. “We are pleased to hear of the government’s foreign dividend measures and glad that they were not accompanied by wholesale curbs on interest deductibility.”
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