Fiat Industrial - the truck and tractor manufacturer - is set to move its tax base from Italy to the UK to to take advantage of the UK's lower corporation tax regime.

The Italian firm, which plans to complete a full merger with US firm CNH Global by the end of the year, revealed the plans in a regulatory filing.

The UK has cut its corporation tax rate from 30% six years ago to its current level of 23% and this figure will drop to 20% by 2015.

Meanwhile, Italy's effective tax rate was 36% in 2012.

In a prospectus filed with the US Securities and Exchange Commission (SEC), it emerged that following the merger, Fiat Industrial expects to be incorporated in the Netherlands but 'intends to operate in a manner to be treated as resident in the United Kingdom for tax purposes'.

The conglomerate's plans endorse the Chancellor, who has spearheaded the drive to lower the UK's corporation tax rates to attract inward investment, but look set to fuel the ongoing controversy surrounding multinationals and their tax affairs.

The Prime Minister, David Cameron, has made tackling tax evasion in a co-ordinated, global fashion, a key issue for the G8 summit in Northern Ireland next month.