Business advisor KPMG has said that the UK remains an attractive place to do business but less so because of its decision to leave the European Union.
It said the UK still had the second most competitive tax regime but warned there could be net outflows of business functions with executives citing Brexit as having the greatest impact on investment and business activities in 2017.
KPMG's annual ranking of tax competitiveness and appeal as a destination for foreign direct investment - titled Succeeding in Uncharted Waters - was conducted among 100 of the largest UK listed companies and foreign owned subsidiaries and 60 companies from other G7 nations.
Ireland's tax regime topped the rankings with 74% of UK companies selecting it as one of their 'top three' with the UK second. The gap though between the two had grown from one percentage point to nine since 2015.
Among non-UK companies, preference for the UK fell from first to fifth place showing what KPMG called "a sharp decline in perceptions of the UK's tax regime".
Non-domestic businesses cited as reasons disruptions in trade deals and tariffs, an end to the UK's access to the single market, and the mobility of skilled labour.
KPMG tax partner Robin Walduck said: "In many respects this year's survey suggests that it's business as usual.
"The material change this year is that finance executives are now grappling with the question of how Brexit might impact current and future investment in the UK.
"It's in this area we see a striking divergence between the views of UK companies and their G7 peers, providing some insight as to why the UK has started to fall out of favour."
Those already in the UK were broadly confident about the country's future, but "for those on the outside looking in, the picture is looking less positive and businesses are markedly more bearish", Mr Walduck said.
"As Brexit negotiations get underway, this begs the question whether UK respondents are being too bullish with misplaced optimism, or if non-UK respondents are being too quick to discount the UK."
While few planned to move business out of the UK the number seeking to move functions in had dropped materially among both domestic and foreign firms.
Another tax partner, Tim Sarson, said: "Historically, the UK's attractiveness has been driven by its status as a trading nation, stable politics and tax system - but Brexit is challenging this.
"It's clear, the potential disruption of leaving the EU and ambiguity over the UK's future economic prospects now weigh heavily on executives' minds. Taken together with companies' views on migration of business functions this points to a possible net outflow of activity from the UK in 2017 and beyond."