Corporation tax is to be reduced from 26% to 24% from 1 April in an attempt to attract business investment.
In his last Budget, George Osborne had already announced a reduction in the rate of corporation tax to 25% on 1 April 2012.
However, today's further reduction means the government is on target to bring it to 22% by 2014 and "within sight" of 20%.
The Chancellor said the move meant corporation tax in the UK was "dramatically" lower than its competitors, adding it was an "advertisement for investment in jobs in Great Britain".
Osborne also announced plans which could lead to small firms being taxed on the amount of cash passing through their businesses rather than more complicated methods used for large companies.
The move, which will simplify the process, will apply to businesses with a turnover of up to £77,000 and could affect up to three million firms.
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