Published: Wed, October 31, 2018
Markets | By Otis Pena

Amazon, other tech giants face United Kingdom 'digital services tax'

Amazon, other tech giants face United Kingdom 'digital services tax'

The UK government has called on digital platforms including Facebook and Amazon to "pay their fair share" with a 2% revenue tax.

Hammond said the digital sales tax will be structured to apply to "established tech giants" rather than tech start-ups and was at pains to emphasise that it was "not an online-sales tax on goods ordered over the internet". Tech firms have been able to allocate where they book profits in the most tax-advantageous way, depriving governments of billions of pounds of revenue.

The tax, levied at two per cent of UK-derived revenues, was unveiled by Chancellor Philip Hammond during the Budget on Monday and is meant to raise around £400m from companies operating as search engines, social media platforms, and online marketplaces.

The measure, one of a number of tech-related developments, arrived in the chancellor Philip Hammond's Budget 2018 on Monday, which also apparently heralded the "ending of austerity".

The scheme, which offers a discount of £1,500 per office in England in an attempt to encourage local press back into town centres, for a further year.

"We have heard assurances that the new tax, created to raise more than £400m, will not be a crude digital sales tax and will not impact smaller digital platforms", said Grech.

During the Budget 2018 announcement at the House of Commons this afternoon, Chancellor Phillip Hammond said a global solution was needed to fairly tax large technology companies around the world, but an agreement was not happening quick enough.

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Mr Johnson said that the rise in income tax thresholds announced by Mr Hammond would benefit the wealthy more than those less well-off, with a typical higher rate taxpayer gaining £176 a year and a basic rate payer gaining just £24.

He went on to say that the tax is "narrowly targeted" on specific models.

He said: "The tech giants do need to pay more in tax but the measure announced today is pittance for these massive global companies". It is expected to raise about £400 million ($512 million) a year, Hammond estimated.

While Amazon provides a good example of the rationale behind the tax, some feel that Apple is the big target here because of its high revenue in Europe that ends up going through its headquarters in Ireland, a low-tax safe haven.

"Fiscal Phil" has targeted online tech giants by announcing a new digital services tax in his Budget, promising to "deliver global corporate tax reform for the digital age".

The UK's ministry for economic and finance has announced a new tax targeting corporate tech giants.

But in the meantime, the government would consult on the detail to make sure it got its plan right, and then ensure Britain remained one of the best places to start and scale up a tech business. They also suggested it was political, saying that "the big companies have been dominant and this is a political effort to allow some United Kingdom or European companies to compete".

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