ICAEW Warns Proposed Distribution Tax Reforms Could Harm Economic Growth
The Institute of Chartered Accountants in England and Wales (ICAEW) has raised concerns that proposed changes to the tax treatment of corporate share capital reductions could negatively impact business activity. While supporting broader efforts by the government to modernize distribution-related tax rules, ICAEW highlighted potential adverse effects on company behavior, including reduced flexibility for buyouts or dividend distributions. The organization suggested policymakers re-examine existing securities transaction frameworks and incorporate anti-avoidance measures targeting share exchanges followed by capital reductions. It also supported proposals aimed at harmonizing the treatment of domestic and international dividends as well as removing trading requirements from demerger legislation to improve clarity and reduce complexity for businesses.
