asked the Minister for Finance the present rate of corporation profits tax on exported goods; and the estimated extra yield to the Exchequer, on the assumption of a maintenance of the volume and value of such exports, that would accrue from a doubling of the existing rate.
Written Answers. - Exports Tax.
361.
Under the existing export sales relief scheme a manufacturing company is effectively exempted from corporation tax — that is, charged at a nil rate — for 15 years on profits arising from the export of goods and is entitled to marginal relief for a further period of five years. The relief will, however, cease altogether in 1990 and, for new businesses, will, generally speaking, be replaced by the scheme provided for in Chapter VI of the Finance Act, 1980. The latter scheme provides for an effective corporation tax charge of 10 per cent on a company's profits from sales of its manufactured goods whether on the domestic or export market.
The cost of export sales relief was £52.9 million in 1978-79, a typical year. If the relief were to be effectively reduced to one-half of its present level the effective rate of tax on most export profits would amount to 22½ per cent — i.e., half of 45 per cent — and, assuming that there were no change in the volume and value of exports, the saving to the Exchequer would be approximately one-half of the cost of the existing scheme, say £26 million. However, in such circumstances, companies would be entitled to opt, as from 1 January 1981 for the new 10 per cent scheme.