The potential impact of Brexit on tax
The British public have spoken and made clear that they see the UK’s interests best-served by leaving the European Union.
The Brexit could have significant implications for direct and indirect tax matters as well as on the economy as a whole.
In the short term, the vote in favour of leaving the EU will have little, if any, immediate impact on indirect or direct taxes. Few changes are likely to occur while the secession negotiations take place. Following a negotiation about exit terms, the UK’s approach to taxation could diverge from the current position.
The Brexit will provide numerous challenges and opportunities for the different industries and sectors of the Swiss economy that have to be analyzed and dealt with. Swiss companies are well advised to analyze the potential impact of Brexit on their business and in their planning, both short and long term and to adapt their strategies as needed.
Explore the potential direct and indirect tax implications summarized in Deloitte’s Briefing Paper
Our paper analyses the direct and indirect tax implications for the possible alternatives to membership of the EU:
- For indirect tax, the impact on Customs Duty; Excise Duty; VAT and Capital Duty, as well as which indirect taxes would be unaffected.
- For direct tax, relevant EU law; what would change if the UK left the EU; State Aid rules and Harmful Tax Practices.
Explore the other effects of Brexit on business and the economy
Over the coming months and years, there will be significant changes to the political landscape. In the short term, the government is likely to set up a cross-departmental task force in order to negotiate Britain’s exit from the EU.
To counteract the immediate negative shock to the economy, it is likely that a number of policy measures will be announced. The government could introduce some pro-business measures in an emergency budget, ease fiscal deficit cuts and temporarily suspend its fiscal rules and the Bank of England’s inflation target.
The medium-term impact on the economy is harder to assess and will depend largely on the pace and success of the government’s negotiations with the EU and on future access to the single market.
In the longer term, economic activity will be determined by a combination of the nature of the UK’s post-exit trade relationship with the EU and its ability to exploit its newfound freedom to forge individual trade deals with emerging markets outside the EU.