President Barack Obama is planning to close a tax loophole that allows American companies to avoid paying taxes on overseas profits, the White House says.

Barack Obama’s 2016 budget will impose a one-off 14% tax on US profits stashed overseas, as well as a 19% tax on any future profits as they are earned.

The $238 billion raised will be used to fund road projects in the US.

The proposal is one of the main components of Barack Obama’s latest budget, due to be presented on February 2.

The spending plan, including the proposal on overseas profits, would require approval from the Republican-controlled Congress to be made law, something seen as unlikely.

Research firm Audit Analytics calculated last April that US companies in total have $2.1 trillion-worth of profits stashed abroad.

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It found US conglomerate General Electric had the most profit stored overseas at $110 billion. Tech giants Microsoft and Apple and drugs companies Pfizer and Merck all featured in the top five.

No tax is currently due on foreign profits as long as they are not brought into the United States.

As a result some companies put their earnings in low tax jurisdictions and simply leave them there.

The White House said its plans for an immediate 14% tax would raise $238 billion, which would be used to fund a wider $478 billion public works program of road, bridge and public transport upgrades.

“This transition tax would mean that companies have to pay US tax right now on the $2 trillion they already have overseas, rather than being able to delay paying any US tax indefinitely,” a White House official said.

The official said that after this one-off tax, the 19% permanent tax firms would have to pay on overseas profits “would level the playing field, and encourage firms to create jobs here at home”.

The tax rate is far lower than the current US top corporate tax rate of 35%.