Emergency legislation voted through parliament will prevent millions of pounds in funding going to companies which don’t pay their way north of the border.
Those who are registered in tax havens, or are a subsidiary of an offshore company, will be prevented from getting support.
Pressure is now mounting on Rishi Sunak to bring in similar legislation, though few hold out hope that he will.
Government borrowing surged to £62.1 billion to April – the highest figure for any month on record – after heavy spending in the face of the crisis.
Questions are now being raised over the measures that could be brought in to meet the costs.
“There are rules that must be followed”
Last month France joined Denmark and Poland in blocking firms registered in offshore tax havens from claiming aid from its government coronavirus bailout.
Announcing the measures, Finance Minister Bruno Le Maire said:
“It goes without saying that if a company has its tax headquarters or subsidiaries in a tax haven, I want to say with great force, it will not be able to benefit from state financial aid,” Le Maire told the France Info radio station.
“There are rules that must be followed. If you have benefited from the state treasury, you cannot pay dividends and you cannot buy back shares,” he said.
“And if your head office is located in a tax haven, it is obvious that you cannot benefit from public support.”
Following similar moves in Scotland, Patrick Harvie, the Scottish Green party co-leader, said: “Any company which avoids its responsibility to contribute to society should not be getting handouts when things go wrong. That’s why many European nations and Wales have already made this commitment.
“I’m delighted that ministers finally saw sense on this basic issue of fairness. This move isn’t the final word, but it marks the beginning of a new approach to tackling the companies which shamelessly avoid paying tax, and we will continue to build on what’s been achieved today.”
In other measures, MSPs were given extra powers to: take over badly run care homes where there was a threat to life; give £19.2 million extra for carers; and, in a surprise defeat for the government, extend the life of pop-up cycle lanes and wider pavements to support physical distancing measures.