Shire's tax move to Ireland to put heat on UK govt

By Jonathan Saul

LONDON, April 16 (Reuters) - British drugmaker Shire's move to become tax-resident in Ireland is unlikely to trigger an exodus by multinationals to other domiciles, but will put pressure on the government to keep Britain business-friendly.

Shire's (SHP.L: Quote, Profile, Research) board this week said it planned to move its parent company to Ireland "to help protect the group's taxation position".

Low corporation tax -- currently 12.5 percent -- has been one of the cornerstones of Ireland's attraction for foreign companies over the past decade. That compares with 28 percent in Britain.

"We are particularly worried that an uncompetitive corporate tax system is spoiling the UK's attractiveness as a place to do business, and that other internationally mobile firms will follow Shire's path," said Richard Lambert, director-general of the CBI British industry group. Francesca Lagerberg, a partner at Grant Thornton, said Shire's move sent a "warning shot across the bows" to the government to ensure they keep the UK competitive.

A finance ministry spokesman said the UK offered one of the "most competitive business tax regimes of any major economy".

"Tax is just one of a range of factors that contribute to our global competitiveness, along with our highly skilled workforce, world class infrastructure, and the internationalism and openness that make us home to more foreign banks than anywhere in the world," the spokesman said.

But one of the key concerns raised by Shire's decision is how companies are taxed on profits earned outside the UK.

Shire said its business had been transformed from being UK focused into an international operation, with most of its revenues generated outside the UK.