WPP CEO Sorrell Recommends Relocation of Headquarters to U.K. From Ireland
WPP Plc (WPP) Chief Executive Officer Martin Sorrell said he’ll recommend the world’s largest advertising company return its tax base to the U.K. from Ireland, following proposed cuts in Britain’s corporate tax.
“We’ve looked at small print and releases,” Sorrell said in an e-mail today. “Subject to draft legislation and enactment we will recommend a return to U.K. to board and shareowners.”
WPP, the owner of ad agencies including Young & Rubicam Inc., Ogilvy & Mather and the Grey Group, left the U.K. for Ireland in 2008, citing the burden of taxation on foreign earnings. Media company United Business Media Ltd. (UBM) and drugmaker Shire Plc (SHP) also moved their tax bases to Ireland, while another media company, Informa Plc (INF), moved to Switzerland.
Unveiling Britain’s 2011 budget yesterday, Chancellor George Osborne indicated he would speed up a cut in corporate tax and move forward with plans to amend tax on overseas profit of U.K. companies. Osborne told BBC Radio 4 today that WPP was planning to move back to the U.K.
“Other countries are quite deliberately making their tax systems more competitive, and attracting multinational companies away from the U.K.,” Osborne said in his budget speech yesterday.
He pledged to change “complex rules” for controlled foreign companies and introduce a 5.75 percent rate on overseas financing income.
WPP rose 2 percent to 759.5 pence as of 11:39 a.m. in London trading.
About 90 percent of WPP revenue is generated outside Britain and would have seen no tax relief when repatriated back to the WPP U.K. holding company, according to media analyst Alex DeGroote at Panmure Gordon & Co.
A move back to the U.K. would be a “cosmetic thing” and wouldn’t require large changes because WPP has kept most of its offices and operations in London, he said.
Sorrell also serves on an committee created by Prime Minister David Cameron last year to advise on business and economic strategy.
“Symbolically and practically it looks brilliant if such a high-profile FTSE 100 company re-domiciles in the U.K. again,” DeGroote said. “You can hardly be an ambassador to business if you’re a tax exile.”
UBM, the owner of PR Newswire, is also deciding whether to relocate its tax base to the U.K., Chief Financial Officer Robert Gray said in an e-mailed statement.
The company, which also moved its tax base from Britain in 2008, said it was “actively considering” a return to the U.K. and is reviewing details of the proposed tax changes.
To contact the editor responsible for this story: Simon Thiel at email@example.com
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.