The European Commission has proposed a raft of strong measures to clamp down on tax fraud and evasion.

The proposals include minimum sanctions for tax crimes, a cross-border tax identification number, a European Union tax payers' charter and "stronger common measures against tax havens".

"Let there be no illusion: tax evaders steal from the pockets of ordinary citizens and deprive member states of much-needed revenue," said Algirdas Šemeta, commissioner for taxation, customs, anti-fraud and audit. "If we want fair and efficient tax systems, we must stamp out this activity."

"The political will to intensify the battle is there. Now it is time to translate that into action," Šemeta said.

The size of the shadow economy is estimated to be nearly one fifth of GDP on average across the 27 member states of the EU, representing nearly €2 trillion ($2.5 trillion) in total, the Commission said.

Tax evasion has been hitting the headlines in the UK lately as it has emerged that several household names have used offshore tax structures to avoid paying national income tax. The country's government is in the process of introducing a general anti-abuse rule designed to tackle aggressive tax planning. The GAAR is set to come into force next year.

The Commission, however, believes national efforts to get to grips with tax evasion are insufficient in an increasingly global and technologically advanced world economy.

The organisation said it will develop the ideas put forward above with the aim to present an action plan before the end of the year.