The European Commission has announced further measures to promote fair, efficient and growth-friendly taxation in the EU. In its statement, it said: “New rules are needed to align the tax laws in all 28 EU countries in order to fight aggressive tax practices by large companies efficiently and effectively.”

Its proposals include the Anti Tax Avoidance Package, which calls on EU countries to strengthen and harmonise fiscal policies in preparation for international standards against base erosion and profit shifting (Beps).

The proposal includes the following key features:

legally blocking the most common methods used by companies to avoid paying tax;

• a recommendation to EU countries on how to prevent tax treaty abuse;
• a proposal for countries to share tax-related information on multinationals operating in the EU;
• actions to promote tax good governance internationally;
• a new EU process for listing third countries that refuse to play fair.

The EC claims that these measures will together hamper the “aggressive tax planning” and boost transparency between EU countries, ensuring fairer competition for all businesses in the EU.

The EC's announcement comes just days after the British government said Google would be paying just £130 million in corporate taxation on profits arising in the UK from 2005 to 2015. The payment represents an effective tax rate of close to 3 per cent, which politicians have called 'derisory'.

The next steps include the two legislative proposals of the Anti Tax Avoidance Package being submitted to the European Parliament for consultation and to the Council for adoption, while the European Council and Parliament will need to endorse the Tax Treaties Recommendation and EU member states will then need to revise their tax treaties.