The British tradition of worldwide taxation sounds as though it is founded on delusions of grandeur. In fact – as UK-based multinationals know to their cost – the ability to tax profits made overseas when they are repatriated to corporate headquarters is all too real. Now the Treasury is planning to consult on whether it should end the domestic taxation of foreign dividends. This is a welcome move.

The current system has its origins more than 200 years ago. Where a multinational company based in Britain receives profits from foreign subsidiaries, it is taxed on them according to UK rules, although it gets credit for the tax already paid in the countries where the profits were generated.