LONDON (Reuters) - The British-based businesses of foreign banks will not avoid paying the country's tax on banks' balance sheets and profits, the government said on Monday following a consultation on changes to the tax proposed in July last year.


The government said it had considered representations by foreign banks that they be excluded from the levy, introduced in 2011 in response to the financial crisis and aimed at reducing risky behavior by banks.


"The government believes that including UK permanent establishments of foreign banking entities within the scope of the bank levy remains appropriate and will not be amending this policy," the statement from Britain's finance ministry said.


The decision comes as banks debate whether to move parts of their businesses out of Britain following the vote to leave the European Union so they can continue to serve EU customers.


The government announced in July last year it would amend the levy by largely replacing the tax on bank balance sheets with a surcharge on profits.


The government plans to publish draft legislation for the changes to the levy in 2017, and the new rules will become active from 2021.

(Reporting By Lawrence White. Editing by Jane Merriman)