Last week's announcement by the British chancellor, George Osborne, that UK corporate tax rates would fall and the system be simplified received a subdued approval from the business community. The changes are an attempt to make the UK a more attractive place to do business and, according to tax experts, they undoubtedly will. However, whether they are enough to win back businesses that moved their domicile to Ireland to avail of our 12.5% rate remains to be seen.

According to Bill Dodwell, head of tax policy at Deloitte, "any company that moved to Ireland to turbocharge its tax structure won't be tempted to return to the UK" once these changes are introduced.

The biggest change announced in the Corporate Tax Reform document was a change to tax rules on multinationals' foreign profits – controlled foreign companies (CFC). In 2011, an interim package of changes to CFC rules will be introduced, including an exemption for intra-group transactions. In 2012 there will be another set of regulations.

"The old rules in the UK were too draconian," said Paul Smith, head of international tax at Grant Thornton in London. "Those profits were overseas and should never have been taxed here."

Earlier this year the British government announced a cut to the main corporate tax rate from 28% to 24% over the next four years, starting next April. That will bring the headline corporate tax rate in the UK to its lowest-ever level but it is still significantly higher than Ireland's 12.5% rate.

Ireland was determined to protect this 12.5% corporate tax rate when it was agreeing the terms of the recent EU/ IMF bailout. It is considered to be a critical part of Ireland's international branding strategy and any forced increase would affect our competitiveness.

However, it is not the only reason that many multinationals decided to relocate, according to leading UK tax experts. For example, advertising group WPP became tax domiciled in Ireland several years ago. Its main reason for moving here was not the headline tax rate, but the fact that there was no CFC regime. As only 10% of its business was in the UK, it felt taxation of CFCs was effectively double taxation. According to sources, the recently announced changes in the UK do not warrant a change in WPP's view.

"Although the CFC tax rate has been cut, it still remains higher than Ireland and there are no guarantees how long the current coalition in the UK will last, and who will be in power after them, so there will not be a knee-jerk reaction to these changes from WPP," a source said.

Ireland, on the other hand, has shown its long-term commitment to its corporate tax regime. There was a view that the reason the government took so long to agree to a bailout from Europe was its determination to protect that.

Osborne is hoping the British reforms will help to create one of the most competitive corporation tax regimes in the G20 group of nations – a group Ireland is not a part of. According to Dodwell, these tax changes are aimed at making the UK more competitive compared to the rest of Europe and are not attempting to compete directly with Ireland. The UK corporation tax regime is now in the middle range of all the OECD countries and that is an acceptable level for corporation tax, according to Smith.

Smith does think "the changes may dissuade some UK-based companies from leaving". For example, the chancellor confirmed that he would introduce new provisions on intellectual property which were announced last December by the previous government. The tax on income from intellectual property will be 10%; this compares to 5% in the Benelux countries.

According to Smith, "this means there is no longer a huge difference in the rate, so UK-based companies will not see such a big financial gain in moving to those countries". Following the announcement the pharma giant, GlaxoSmithkline, announced its first new plant in the UK for over 20 years.

Multinational companies will also get an effective corporation tax rate of 8% for their offshore financing operations under new rules designed to stem the flow of companies leaving the UK. But according to tax advisers, it is possible to get rates as low as 1% for these operations in other jurisdictions so this change will never be enough to lure international multinationals.

Although multinationals are attracted by low corporate tax rates, they are more often than not just one of the factors that attract them, according to Dodwell.

"The UK has a strong pharma sector and excellent links with universities, so the changes to tax on income from intellectual property will make a difference for that sector as the UK is already an attractive place to operate," he explained. "Most international companies look at the whole package, not just the tax rate when deciding where to locate."