The UK government should overhaul its tax regime to stop more multi-nationals following United Business Media’s decision to switch tax residency to Ireland, urges the Confederation of British Industry.

The employer’s body argues the system is in need of a radical change if the UK wants to remain the local of choice for controlled foreign companies.

Richard Lambert, CBI director general, said: ‘Firms are seriously concerned about the high level and rising complexity of taxation in the UK and are increasingly prepared to vote with their feet. The Treasury cannot ignore this issue or argue that companies are crying wolf.

‘The prime issue in this case is the complex UK practice of taxing profits earned abroad once they are remitted to the UK, raising the potential for double taxation. This makes the UK less attractive to internationally-mobile firms such as UBM.’

An analysis of the UK’s corporate tax regime, published by the CBI last month, calls on the government plays a leading role in EU and Organisation for Economic Co-ordination and Development discussions on further coordination of national tax systems.

According to the World Economic Forum, the UK has slipped from 4th place in 1998 to 15th in 2003 on the Global Competitiveness Index.

While the UK's marginal corporation tax rate was third lowest in the EU in 1997, it is now the sixth highest and the effective average corporation tax rate is the eighth highest in the OECD.

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The CBI