Multinationals face overhaul despite government retreat.

The Inland Revenue said companies would still be able to pool income from high tax countries with income from low tax countries to minimise UK tax. But only rates of up to 45% will be allowed.

The measure amends original plans revealed by Gordon Brown in the Budget to eradicate the use of Dutch mixers which ministers claim are used for tax avoidance, precipitating a war of words between him and Peter Wyman, a PricewaterhouseCoopers partner.

But while the new measures received a broad welcome there remains concern that companies operating in high tax regimes will lose out because they pay higher rates of tax. Peter Cusson, international tax partner at PwC, added: ‘Multinationals will have to restructure just to get back to the position that were at in the first place.’

Further concern remains that new rules will still be complicated and fail to approach the ‘radical’ reform intended at the beginning of consultation two years ago.

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