He told the House of Commons that the government will raise £5 billion over the next five years by taxing profits from banks and companies like Google and Amazon who make money in the UK and then shift it abroad.
He said that some large multinationals including companies in technology “use elaborate structures to avoid paying tax”.
He will introduce a 25 percent tax on such profits. The diverted profits tax might be difficult to collect however.
Earlier this year, Google chairman Eric Schmidt said that if governments griped about companies like his not paying enough tax, they should introduce legislation to change the picture.
However, the situation is complicated by the fact that firms like Google and Starbucks will simply find other ways to avoid paying tax and such changes really require international cooperation.
One financial analyst told TechEye that even if 20 countries agreed to such changes, the companies might simply find country 21.