The Prime Minister used a key speech in India to tell journalists that the Government had no intention to introduce new laws to curb tax avoidance.
Instead, Cameron said it was for businesses to answer a 'moral question' about paying the tax they owe.
The Prime Minister David Cameron has used a key address during his trade mission to India to tell journalists that the UK will not introduce laws to ban tax avoidance.
There has been considerable pressure on the Government to legislate after a series of scandals involving major multinational companies and the amount of tax they pay to the UK Exchequer.
Vodafone, Google and Starbucks are just a few of the big names criticised by pressure groups for paying minimal UK tax. In most cases their accountants rig their practices so revenues are diverted abroad to offshore tax havens and low-tax states in Europe like Ireland.
The scandal has prompted many companies to offer additional sums to the Exchequer to repair public confidence in their brands. However, critics want the Government to change the law to make the payment of tax a legal obligation rather than a commercial one.
Rejecting this proposal, Mr Cameron said that it was Government's responsibility to keep corporation taxes low, and businesses' responsibility to pay a fair amount. He also questioned the clear distinction between very aggressive tax avoidance, which is entirely legal, and tax evasion that is illegal.
Accepting that very aggressive tax avoidance schemes posed a problem, he said that this is something that must be confronted globally. France and Germany have indicated they would support moves to compel companies to pay more domestic tax.
"I think the problem with that is that there are some forms of tax avoidance that have become so aggressive that there are moral questions that we have to answer about whether we want to encourage or allow that sort of behavior," he said.