David McNair, senior economic justice adviser at the charity Christian Aid, says tax havens are used in a variety of ways, but the general principle - for a business active in a number of countries - is to maximise the amount of profit made by subsidiaries based where taxes are low, at the expense of those based where taxes are high.

BBC: Tax havens: Is the tide turning?

As prime minister of the presidency holding nation, David Cameron has said he wants to focus on combating trade protectionism, cracking down on tax havens and promoting greater government transparency.

BBC: UK assumes presidency of G8 group