Yahoo Finance UK chancellor Rishi Sunak fires starting gun on post-Brexit freeports
Watch: What are freeports?
The chancellor has officially announced plans to set up post-Brexit “freeports” in Britain — special low-tax business zones aimed at attracting international trade to the UK.
Rishi Sunak on Tuesday said the bidding process to become a freeport will be launched before the end of the year. Airports, rail hubs, and sea ports will all be eligible to apply for the status and the government is hoping to establish at least one freeport in each nation of the UK.
“Our new Freeports will create national hubs for trade, innovation and commerce, regenerating communities across the UK and supporting jobs,” Sunak said in a statement.
Freeports are special trade zones that do not function under the same tax rules as the rest of a nation. British freeports will enjoy simplified customs procedures and tax breaks on goods passing through.
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It means a company can import products into a freeport without having to pay the UK tax rate on that item. They can then process the item in the UK before exporting it to a third country or selling it into the UK market, where it will face standard taxes.
The idea is to encourage international businesses to set up factories in free trade zone and to boost trade through Britain’s transport hubs.
“They will attract investment from around the world as we embrace new opportunities following our departure from the EU and will be a key driver for economic recovery as we build back better post coronavirus,” Sunak said
As well as tax breaks on imports, businesses investing in infrastructure and operations within freeports will also enjoy tax breaks. The government said this would encourage job creation. Planning laws in freeports will be relaxed to speed up their development.
Sunak has long been an advocate of freeports. In 2016 while still a backbencher he authored a report on the “opportunity” presented by freeports post-Brexit. He argued they could create over 80,000 jobs and boost the economy of the North.
Freeports already exist around the world. One of the biggest is in Geneva, Switzerland. A 2017 study estimated around SwFr 100bn (£84.4bn, $110bn) worth of art and antiques are stored tax free in Geneva’s freeport. Hong Kong also traces its roots to freeport status.
Tax free zones are also a major plot point in the recent blockbuster Tenet. The unnamed main character in tasked with breaking into a high security freeport storage facility at Oslo airport.
Watch: What is a no-deal Brexit?
