Finance ministers from the G20 group of the world’s largest economies are backing a major overhaul of the international tax system.
They are reacting to public anger over multinational companies not paying their fair share of tax and because governments are having to find cash to cover large budget deficits.
The idea is to close loopholes used by companies such as Apple, Google, Starbucks, Amazon Vodafone, Diageo and Cadburys to avoid paying billions in taxes.
The action plan they are supporting has been drawn up by the Organisation for Economic Co-operation and Development to stop firms channelling profits into overseas tax havens, or European countries which give tax breaks such as Luxembourg, the Netherlands and Ireland.
The tax plan is one of the major ‘deliverables’ that will go before the summit of G20 leaders being hosted by President Vladimir Putin in St Petersburg in early September.
The companies defend their actions by saying they follow the law wherever they operate and pay what tax is due.