UK media group sets up tax base in Ireland

LONDON-BASED United Business Media (UBM) is to become the latest UK company to establish a base in Ireland for tax reasons.

UBM is the second company this month to snub the UK's tax regime, following the decision by drug group Shire to establish its tax domicile here.

In a statement to the London Stock Exchange yesterday, the media group announced plans to create a new holding company that will be listed in the UK but incorporated in Jersey.

It will be resident in Ireland for tax purposes. The company will hold a number of its board meetings in Dublin but has no plans at this stage to relocate any staff here.

UBM already has an office on Merrion Square in Dublin, employing a handful of staff involved in sales and support functions for the group.

Earlier this month, UBM appointed Alan Gillespie, the chairman of Ulster Bank, to its board of directors.

There are a number of reasons for basing itself in Ireland. UBM will pay corporation tax at 12.5 per cent here compared with the 28 per cent rate in the UK. About 85 per cent of its profits are earned outside the UK. Unlike Ireland, Britain charges a top-up tax on those profits.

The UK's tax system also requires its companies to file separate returns for their overseas subsidiaries, which is a costly process.

In addition, capital gains made on the sale of overseas assets are not taxed in Ireland. UBM has acquired 52 companies in the past three years.

"The board of UBM now believes that the long-term interests of its shareholders are best served by the adoption of an international holding company corporate structure that domiciles UBM's parent in the Republic of Ireland, which has a less complex system of taxation," UBM said.

"In contrast, the UK tax system imposes tax on all companies in a worldwide group, and consequently UBM has had to manage the interaction between the UK tax system and the tax systems of the multiple countries in which UBM operates. This has given rise to both significant compliance costs and risks of inadvertent tax charges arising."

Commenting on the move, Joan O'Connor, president of the Irish Taxation Institute, said: "Ireland has a much simpler tax system. . . a number of UK and US companies are looking at locating their head office operations here."