British Chancellor of the Exchequer, George Osborne, introduced what is known as "Google Tax" in his Budget speech on Wednesday. This will come into effect from April.
He said that the Diverted Profits Tax is "aimed at large multinationals who artificially shift their profits offshore".
The tax levies a 25 per cent charge on firms which divert their profits overseas via complex business structures in order to avoid paying tax in the United Kingdom.
Major companies like Google, Starbucks and Amazon are accused of indulging in such practice and they have often been slammed by unwilling tax payers.
The Chancellor also introduced provisions for a wider crackdown on tax avoidance and evasion. He said the government would raise £3.1 billion, besides a rise on the rate of bank levy to .021 per cent. “This would raise an additional £900 million per year,” he said.
He also promised investment in the "Internet of things" and online access among others. He said £600 million would be spent on improving broadband services – to increase speed to 100 Mbps to enable Britain to be "out in front". He also announced free WiFi in public libraries.
Opposition leader Miliband has criticised Osborne’s Budget and said that people won’t believe in a government “that's not on their side."