Chancellor set to unveil "Google tax" in next budget

Chancellor George Osborne is expected to next week unveil a range of measures that will tackle the use of loopholes by multinational corporations such as Google, Facebook and Amazon.

The so-called "diverted profits tax" will attempt to reduce the legal practice whereby companies that do not officially have a "permanent establishment" in Britain channel the majority of their revenues through headquarters in Dublin, and by doing so avoid paying corporation tax.

The move is expected to make it much harder for these companies to reduce their tax bills by enforcing a penal tax rate if they are found to have moved cash to overseas in a bid to avoid HM Revenue & Customs (HMRC), according to the Sunday Times.

From April, companies that HMRC can prove have structured their financial arrangements in this way will have to pay the diverted profits tax, levied at 25%.

They will also be expected to reveal both their top and bottom lines by country to provide greater levels of transparency.