Britain might slash corporation tax to 10 percent if EU member states block a free trade deal with the UK or block UK-based banks from accessing its market.
A few weeks ago, new Chancellor Philip Hammond said that UK is "ready to take whatever steps are necessary to protect this economy from turbulence and when the process is over we are ready to provide support for British businesses as they adjust to life outside the EU." He announced the corporate tax rate to be 17 percent by 2020 and did not follow up on previous suggestions of George Osborne to cut the rate to 15 percent. At the same time, some politicians from the EU warned the UK over cutting its tax rate.
At her first European Council meeting, Theresa May was warned that Britain would not be able to dictate the terms of its exit. Mrs. May also requested that the other 27 member states did not continue to exclude her from meetings, but was strongly rebuffed. Prime Minister Theresa May’s advisers suggested to possibly cut the tax rate even more in case the EU would block a free trade deal with the UK or would try to block UK-based banks from accessing the EU market.
An unnamed source said: “People say we have not got any cards. We have some quite good cards we can play if they start getting difficult with us. If they’re saying no passporting and high trade tariffs we can cut corporation tax to 10 percent."
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