Describe the tax regime and rates.

The Case of The Coca Cola Company in the UK

Question 1: Describe the tax regime and rates.

Introduction: In the modern globalised world, almost every organisation has been attempting towards expanding their businesses across the boundaries of their region or nation of origin. As a component of the expansion of the businesses beyond the realms of border, marketing plays a crucial role in enabling an organisation to gain recognition in the novel markets and thereby develop a strong brand identity in that market, majorly through the sales and promotion of the product or services. So as to conduct businesses in the international market, the organisations are required to gain an in-depth knowledge regarding the business environment of that region and recognise the threats and challenges at the initial stage so as to devise suitable strategies for overcoming them. Moreover, they are also required to identify the opportunities that prevail in the markets so that the same can be used for the profitability of the business. The following report shall focus its discussion on the various aspects of the UK market that have been attracting the foreign companies to conduct their businesses in their market. Moreover, the manner in which The Coca Cola Company has penetrated the market of the UK over the years, shall also be explored in the discussions.

Tax Regime and Rates of UK

As per the reports presented by Doing Business (2019) the UK holds a leading position in Europe for the ease of doing business in the market. Moreover, it also positions itself in the 9th rank in the world score. Irrespective of the corporate structure, the organisation, branch or LLP is required to register themselves with the Her Majesty’s Revenue & Customs (HMRC) for paying all the tax liabilities associated with the business. The major taxes and incentives that are relevant with respect to conducting businesses in the UK, include the following:

  1. Corporate Tax:The non-UK resident organisations are liable for the corporate tax at 19 per cent on the profits that are made through the course of conducting the trade in the UK, via a permanent establishment. The rate of the tax has been scheduled to reduce to 17 per cent from April 1st, 2020 (Penningtons Manches LLP, 2019).
  2. Value Added Tax (VAT):A non-UK based resident company is required to register with the HMRC for the VAT, when the annual turnover is over £85,000, unless applicable of any kind of exemptions. There exist three rates of VAT, namely, a zero rate (0 per cent); a reduced rate of 5 per cent for certain UK property associated supplies, car seats of children and domestic fuel and power; and a standard rate of 20 per cent for majority of the goods and services (Penningtons Manches LLP, 2019).
  3. Income Tax (PAYE):Income tax is fundamentally deducted from the salary of the employees every month via the system, ‘Pay as you Earn’ (PAYE). The levels of income tax rates vary in the UK, with the highest band of attracting tax at 45 per cent (Penningtons Manches LLP, 2019).
  4. Tax Incentives:There are varied appealing tax incentives in the UK that can be off set from the corporation tax liabilities of a business. These include the Patent Box and Research & Development expenditure credit (RDEC) (Penningtons Manches LLP, 2019).