An overhaul of corporate tax that will see inbound dividends exempted from tax, as well as some restriction on interest relief, is set to be released today.

The consultation was set to be formally announced by Gordon Brown last night in his last Mansion House speech as chancellor. The actual consultation document is due to be released today.

The document should outline how the Treasury plans to react to various European Court of Justice rulings on the taxation of controlled-foreign companies and foreign company dividends. The cases were brought by up to 1,000 multi-nationals, including Pepsi.

The challenge for the Treasury will be how to make up for the loss of tax revenues from CFCs and foreign income. Limiting interest relief has been cited as one solution, but this could harm the UK’s commercial attractiveness