A shift in the corporate tax regime was unveiled by the Treasury yesterday as it tried to shore up Britain’s reputation as an attractive business location after an exodus of multinationals.

The Treasury described its proposed tax exemption for dividends received by multinationals from foreign subsidiaries as 'one of the most generous' in the developed world. Its consultation document said: “The policy objective is to enhance the competitiveness of the UK by providing the widest possible exemption.”

Businesses have given a warm welcome to the proposed exemption, but warned that the reason why a handful of large businesses had moved their tax base overseas this year had not yet been addressed.

Some businesses remain fearful that they will face higher taxes as a result of a tightening of anti-avoidance rules concerning foreign subsidiaries.

Financial Times