UK's tax moves force Yahoo out of London

Mumbai: Internet technology giant Yahoo Inc is relocating to Switzerland to "increase its financial performance."

Yahoo said it has decided to move its headquarters from London to Geneva because Britain's "uncompetitive" tax system is affecting its attractiveness as a global financial hub.

Chancellor Alistair Darling in his budget speech on Wednesday had announced that people from India and other foreign countries that claim non-domicile tax status would have to pay 30,000 pounds for a seven-year stay in the UK.
 
Yahoo's move comes amidst warnings by tax experts that the proposed tighter tax rules on foreigners bringing money into the UK could push private banks to offshoring their business.

The new tax regime could also harm investment into the UK or deals with UK brokers, they pointed out.

Yahoo, fighting off a takeover attempt by software major Microsoft, is under pressure to cut costs and stay lean as it struggles to regain its web clout against stiff competition from Google.

"This decision is part of our ongoing international business strategy to increase competitiveness, deliver financial results, performance and efficiencies," Yahoo said, adding it remained committed to maintaining a strong presence in all of its key markets in Europe.

The budget recommendations have come as a rude shock to Britain's trade and industry organisations, which had demanded a simpler corporate tax structure.

Google has opened its European engineering headquarters in Switzerland and the shift is expected to take around 18 months. Yahoo said it might affect around 5 per cent of its workforce in Europe.

The Confederation of British Industry (CBI) had also warned that a radical shake-up was needed to win back Britain's status as a competitive place to put businesses.

Real estate industry is also worried that an exodus of high net worth non-domicile people could affect the housing market. Indians and Chinese are among the major investors in London's booming housing market.