British finance minister George Osborne on Wednesday unveiled new measures to raise taxes paid in the country by multinational companies, following a public outcry over methods used to avoid tax.
While corporation tax will drop from 20 percent to 17 percent in 2020, Osborne set out a series of measures he said would increase British tax revenues by 9 billion pounds ($12.8 billion, 11.5 billion euro).
The finance minister, seen as a potential future candidate to succeed Prime Minister David Cameron as leader of the Conservative party, said the plan would “make Britain’s business tax system fit for the future”.
“It will deliver a low tax regime that will attract the multinational businesses we want to see in Britain, but ensure that they pay taxes here too,” Osborne told the lower house of parliament as he set out the annual budget.
“All of these reforms to corporation tax will help create a modern tax code that better reflects the reality of the global economy.”
From April 2017, there will be a cap for the amount that major multinationals can deduct from their taxes by borrowing in Britain to invest elsewhere.
The Treasury will also set new “rules to stop the complex structures that allow some multinationals to avoid paying any tax anywhere, or to deduct the same expenses in more than one country,” Osborne said.
He said that the Treasury would strengthen a withholding tax on royalty payments that allow some firms to shift money elsewhere.
There has been public outrage in Britain and other countries around the world over the tax arrangements of multinationals, particularly in the tech industry.
Earlier this year US internet giant Google agreed to pay £130 million ($185.4 million, 172 million euros) to Britain following a government inquiry into its tax arrangement.
In early March, Facebook announced that it would declare advertising revenue from its top British clients in Britain instead of Ireland, where it has its European headquarters, meaning it should pay more tax.
There had been a backlash against the social network after it emerged that it paid only £4,327 (5,572 euros, $6,119) in corporate tax in 2014.
Osborne said that the measures followed guidelines set out by the OECD economic grouping last year.
The OECD has estimated that national governments lose $100-240 billion (90-210 billion euros), or four to 10 percent of global tax revenues, every year due to the tax-minimising schemes of multinationals.