The ABI with the CBI is lobbying hard to stop the Chancellor Gordon Brown levying additional tax on international earnings.
The dropping of so-called "double taxation mixer relief" would mean UK companies having to pay more corporation tax on earnings already taxed from foreign subsidiaries. Tax experts suggest this measure could result in more UK companies setting up outside the UK.
Axa's parent company in the UK, Sun Life and Provincial Holdings, has denied the tax proposal influenced its decision to de-list from the London Stock Exchange and move its operations to Paris. Allied Zurich has also moved its headquarters from London to Zurich.
The Inland Revenue currently allows UK-based companies to off-set tax paid by their foreign subsidiaries as credits towards their liability to UK corporation tax.
Mixer allow companies to balance the different rates of tax paid abroad with the UK's 30% rate of corporation tax.
Ending this relief, as the Chancellor favoured in his budget last April, will mean UK-based multi-nationals having to pass on to the Treasury any marginal savings they make from lower overseas tax rates. The amounts involved could be substantial.
Benedict McHugo, the ABI's head of tax, said the Chancellor's proposal could seriously undermine the tax advantages to multi-nationals of being based in the UK and increase their tax bills by at least £300m.
He said: "It would make the UK a less attractive base for multi-national firms. We need to attract continued foreign investment to the UK but this tax change would send out the wrong message."
McHugo stressed that the measure could have a devastating effect on London: "Insurance is a very mobile business and there is the danger that UK-resident insurers could move their headquarters elsewhere."
He added that the ABI is making the implication to the Government.