(The Guardian): The UK government should urgently analyse the impact of its new tax rules on developing countries, MPs on the House of Commons international development committee said on Thursday. Depending on the results of the analysis, the government should consider whether to drop its proposals from its finance bill, a committee report, Tax in Developing Countries, said. In the 2012 finance bill, the government proposed a relaxation of its anti-tax haven laws, or controlled foreign companies (CFC) rules. Designed to discourage UK-owned corporations from using tax havens, the rules have applied to British-owned companies operating either in the UK or overseas. 

If a UK-owned company reports profits in a country with lower corporate taxes than the UK, the government is able to impose an extra tax charge on the company to "make up the difference".

Consequently, as things stand, profits moved from developing countries into tax havens still incur tax at UK rates.

Under the new rules, due to come into force in January, the UK will only impose this extra levy if the profits have been shifted from the UK. Profits moved from developing countries into tax havens will incur tax at the tax-haven rate, rather than the UK rate, so the incentive to shift profits will be significantly higher.

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