Treasury denies scrapping foreign profits tax reforms

LONDON (Reuters) - Chancellor Alistair Darling is not about to scrap plans to reform the foreign profits tax regime despite media speculation to the contrary, the Treasury said on Monday.

The Financial Times said Darling was preparing to axe a proposed crackdown on tax avoidance, including a global tax on intellectual property royalties, after complaints from business lobby groups.

Those measures are part of a number of options tabled to help offset the costs of exempting companies from paying tax on foreign profits -- a move regarded as crucial to keeping investment flowing into Britain.

The Treasury said there was no question of a U-turn.

"As we said earlier in the year, we are continuing to discuss the details of these proposals with business," a Treasury spokesman said.

"We remain committed to finding a set of proposals that meet our objective of delivering a dividend exemption on foreign profits, while continuing to protect the UK's tax base."

Several companies have already sought friendlier tax climes, raising pressure on the Labour government to ease the tax burden just as it faces an economic downturn and the real risk of losing power in the next election due by May 2010.

Drugmaker Shire and publisher United Business Media have spearheaded the charge to a more competitive regime in Ireland this year and lobby groups have jumped on Labour's growing unpopularity among voters to push the case for less tax.

However, policymakers have said any changes to the taxes companies pay must be revenue neutral to protect the tax take.