The European Commission has issued a plan to clamp down on the estimated one trillion euros (£800bn) lost to tax evasion and avoidance every year across the EU.

Tax havens will be identified and blacklisted while dramatic moves to shut down aggressive tax planning will be implemented. EU members will be encouraged to reinforce their Double Tax Conventions and adopt a common General Anti-Abuse Rule (GAAR).

Other recommendations include a taxpayers' code, an EU Tax Identification Number, a review of the anti-abuse provisions in key EU directives and common guidelines to trace money flows.

Peter Cussons, international tax partner at PwC, said: 'The crackdown on tax evasion and abusive avoidance is not UK specific but sweeping across Europe.

'The EC is taking a measured approach, with fairly specific and carefully defined recommendations. These recommendations are likely to be applied across member states through peer pressure, although some countries may refuse to comply.

'The measures could also result in a common definition of a tax haven which will receive adverse treatment across Europe. The UK is ahead of the curve as we will get more details on our own GAAR next week. It will be interesting to see how the EC GAAR corresponds with the UK version.'

The Commission plans to set up monitoring tools and scoreboards, and will monitor and report on member states' application of the recommendations.

Ian Young, international tax manager of ICAEW's Tax Faculty, said that the tough economic environment is the perfect incentive to create a more effective, fair and simple corporate tax regime.

'The current economic climate incentivises policy makers to clamp down on evasion and fraud, however there needs to be substantial political will for change to take place. The package from the European Commission provides a welcome push to improve the international framework by increasing information exchange across country borders and dealing with tax havens. There is an unprecedented momentum at the moment.'

Collaboration on an international level is critical, he explained.

'The current tax system was put in place at a time when business was much simpler. Globalisation has resulted in the major part of international trade taking place within groups of companies which is 'policed' through transfer pricing and the arm's length principle. But there are concerns about base erosion and the French, German and UK governments have recently urged the OECD to step up its work in this area. The European Commission needs to work closely with the OECD to ensure that their individual efforts are appropriately co-ordinated.'

The EC's action plan and recommendations will now be presented to the EU's Council of Finance Ministers and the European Parliament.