The European Commission has announced it intends to put an interim 3% levy on digital sales revenue of the biggest technology firms, such as Apple, Facebook and Google.
Many large digital businesses have been accused of avoiding tax by shifting profits through complex structures, including via tax havens where they have little or no physical presence. EU officials reportedly think they will raise £4.3bn a year for member states from around 150 firms.
Responding, Liberal Democrat leader Vince Cable said:
"This is the right move. A turnover tax has its problems, but as an interim measure it is necessary. Until a proper international system is agreed it is the best idea going.
"This is also another example of why staying in the EU is desirable. To stand up to the big tech companies we need a collective, co-ordinated approach."