Companies in tax victory on foreign profits

Three years of fraught negotiations between Treasury officials, company finance directors and tax experts were set to bear fruit today as Chancellor Alistair Darling announced that most foreign profits earned by UK companies would be exempt from tax in this country.

The package has been debated since 2006 and even today will not be presented in its final form. The "worldwide debt cap", which would limit the amount UK companies can use interest charges by foreign offshoots to offset UK tax bills, could still be delayed.

The foreign dividend exemption will cost the Treasury money but the debt cap is set to become a revenue earner.