June 2001
A budget for bankers
April's budget proposals from UK finance minister Gordon
Brown contained a few little noticed but significant measures that
might benefit UK companies, notably the proposal to make purchases
of intangible assets, including goodwill, tax deductible bringing
the UK into line with the US.
Currently the amortization of these items is not tax deductible.
This penalizes firms with large amounts on the balance sheet for
goodwill and intangible asset amortization, as they have to declare
the deduction from reported income without benefiting from a
corresponding deduction from taxable income. The effect is that a
company gets tax relief on goodwill purchases year on year,
although it is subject to a tax hit when the goodwill is sold and
its amortization reversed. ...
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