Shoosmiths LLP
  March 14, 2023 - Milton Keynes, England

Is your competitor going to obtain an unfair competitive advantage on Budget day?
  by Shoosmiths LLP

The UK Budget announcement on 15 March 2023 is foreseen to include the creation of 12 low tax zones.

It is understood these will work in tandem with the 10 freeports the creation of which has already been announced (further free ports are foreseen to be created). Low tax zones and free ports are examples of special economic zones (SEZ). A business that establishes in a SEZ receives benefits, such as lower taxes, subsidies, government resources, pre-built relevant infrastructure et al. For the immediate area in which a SEZ is located there can also be benefits, including increased employment and economic development. It is to obtain these broader benefits that a SEZ is established by governments, typically in areas of lower economic performance compared to the country as a whole.

However, there can also be competition issues for those not located in a SEZ. Examples are:

A business that believes it is facing unfair competition from a SEZ located competitor needs to consider, as a starter:

  1. What specifically is the benefit the competitor receives that creates the unfair competitive situation?
  2. Does the benefit constitute a subsidy as defined in the Subsidy Control Act?
  3. Has the authority that granted the benefit obtained authorisation from the Competition and Markets Authority?

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