The proposal for a “one-stop shop” system for filing corporate tax returns could save businesses billions of pounds by cutting red tape.

The system would allow consolidation of all profits and losses incurred in the EU - although member states would still retain their right to set their own corporate tax rate. The move could save businesses more than £2.5bn, it estimated.

EC proposals come as companies operating across borders can create up to 27 different rulebooks for calculating their tax base, including a complex method to work out the taxing of intra-group transactions.

Algirdas Semeta, commissioner for taxation, customs, anti-fraud and audit, said: "The [common consolidated corporate tax base] will make it easier, cheaper and more convenient to do business in the EU. It will also open doors for SMEs looking to grow beyond their domestic market. Today`s proposal is good for business and good for the EU`s global competitiveness."

The single tax return would be shared out among member states according to a specific formula. The formula would take into account: assets; labor; and sales.

The tax base would also be optional for companies, who could continue managing their own tax affairs working through the national systems.