George Osborne pushes for crackdown on tax avoidance by multinational companies

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Chancellor George Osborne has renewed his call to tackle so-called "profit shifting" by multinational companies as he unveils the next steps in his fight to reform global tax rules this weekend.

Finance ministers from the G20 group of major economies are to discuss new rules to prevent large firms from switching profits and costs between countries to reduce the amount of tax they pay.

Companies including Google (NasdaqGS: GOOG - news) , Facebook (NasdaqGS: FB - news) , Amazon and Starbucks have all faced criticism after it emerged that they pay minimal tax on large UK revenues.

A report by the Organisation for Economic Co-operation and Development will be presented to the G20 finance ministers in Moscow.

The UK, Germany and France are expected to lead the push to reform international tax rules.

Mr Osborne said: "This is an international issue that requires international action.

"The global economy has changed massively over the last decade, but global tax rules have stood still for almost a century, and Britain will lead the international effort to bring them into the twenty first century."

Mr Osborne is to announce that Britain will chair a new transfer pricing group which will look at how to reform the system which allows profits to be diverted to a parent companies or to lower tax jurisdictions, via royalty and service payments.

It is one of three group set up by the OECD to look at the tax issues which will help the group prepare a "plan of action" to be put forward to the G20 in July.

Germany and the US and France also lead the other two groups, which will include looking at how to determine tax jurisdiction, particularly in the context of e-trading.

The Chancellor added: "Britain has cut its corporation tax rate by more than any other country in the G20 over the past two years, a message to the world that we are open for business that has seen companies return to Britain, and helping to create and secure thousands of jobs and millions in investment.

"But our commitment to the most competitive corporate tax system goes hand in hand with our call for strong international standards to make sure that global companies, like anyone else, pay the taxes they owe.

"That's why the Britain, with Germany and France, asked the OECD to scrutinise the international rules, and we will together welcome their report to the G20 this weekend."

Mr Osborne wants to use Britain's presidency of the G8 in 2013 to push international progress on the reform of international tax rules, which were first developed by the League of Nations in the mid-1920s and remain essentially unchanged.

Several multinational companies were criticised in a report by the House of Commons Public Accounts Committee last year over revelations about their accounting procedures that allowed them to pay lower levels of tax compared to their income.

HMRC are currently investigating multinational companies over more than £1 billion of UK taxes that may avoided by transferring profits earned in Britain to their parent companies or to lower tax jurisdictions.