UK-based companies with offshore divisions are being encouraged to enter into talks with the Treasury before new proposals on the taxation of the overseas arms are finalised.

KPMG said companies seemed hesitant to respond to a Treasury discussion paper that outlined sweeping changes to the tax treatment of offshore operations.

The government's tax policy chiefs have offered an olive branch in the form of plans to exempt foreign dividends from tax, but companies are being urged to open discussions and ensure that the proposed anti-avoidance measures for controlled foreign companies are not excessively constrictive.

Sue Bonney, the Big Four firm's head of UK tax said: 'Our plea is to respond to it and engage in the debate and shape what finally comes out... If UK business fails to engage with the authorities, it will be on shaky ground if it later complains about the final shape of the reforms.'

Further reading:

Interest relief proposals delayed by Treasury