Amazon is set to be hit by a major new tax bill in the European Union amid a significant clampdown on digital giants.

New proposals have been tabled by the European Commission to impose a three per cent levy on revenues of tech companies with worldwide annual incomes of €750 million (£658 million) and EU incomes of €50 million (£44 million).

It follows widespread criticism of companies like Amazon, Facebook and Google who “escape the current tax framework”.

Last summer it was revealed that Amazon halved its UK corporation tax bill to £7.4 million despite posting revenues of £1.4 billion.

This prompted Labour MP Margaret Hodge to say: “It remains outrageous that Amazon are so blasé that they can ignore all the anger at their failure to pay fair tax in this country.”

In light of this the commission has also proposed a reformation of corporate tax rules, meaning companies are taxed where they have a “significant interaction with users” not in countries with lower tax levels.

Companies will be required to pay corporation tax in any countries where their annual revenues hit €7 million (£6 million), they’re user base is more than 100,000, or they hold over 3000 digital service business contracts.

“The digital economy is a major opportunity for Europe and Europe is a huge source of revenues for digital firms,” EU tax commissioner Pierre Moscovici said.

“But this win-win situation raises legal and fiscal concerns. Our pre-internet rules do not allow our member states to tax digital companies operating in Europe when they have little or no physical presence here.

“This represents an ever-bigger black hole for member states, because the tax base is being eroded. That’s why we’re bringing forward a new legal standard as well an interim tax for digital activities.”

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