Britain to target online giants with new digital services tax

Chancellor of the Exchequer Philip Hammond prepares his speech in his office in Downing Street London ahead of his 2018 Budget announcement on Monday. PRESS ASSOCIATION

The tax will apply to all businesses in the activities mentioned by the Chancellor - search engines, social media platforms, and online marketplaces - where those businesses can boast global revenues of £500 million within those activities, and with at least £25 million in revenues "linked to the participation of United Kingdom users".

The United Kingdom is moving ahead of the European Union as it will introduce a new digital levy that has been dubbed the "Google tax", which was part of Chancellor of the Exchequer Philip Hammond's presentation of Britain's 2019 budget - the first "Brexit budget " - which hopes to raise £400 million. He expects it to generate £275m in its first year, rising to £370m, £400m and £440m in subsequent years.

During the last Budget before Brexit, Hammond also announced £675 million funding to help local councils make plans to improve high streets up and down the country. The country plans to tax businesses providing digital services such as the streaming of entertainment content.

Beginning in 2020, the tax would be assessed on "digital services companies" that register minimum annual revenues of £500 million ($640 million) globally.

Many other jurisdictions including Australia, Singapore, Taiwan and New Zealand, have already announced or implemented taxes on imported digital services.

There was also more money for mental-health services and social care, and £1 billion to ease the transition to a simplified benefits system known as Universal Credit.

Hammond said that Britain has been at the forefront of corporate tax reform and acknowledged that a "new global agreement" remains the best solution in the long run. Facebook or Google might argue that, in their case, the value is in their intellectual property, largely generated in California. At the moment, big tech firms pay very little tax in some countries and more in others: redistributing that burden will mean that some countries will lose out, and their governments are understandably reluctant to agree to a change.

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"At some point, we will need to pay more tax if we are to continue to increase spending on the NHS like this", Mr Johnson warned.

But he said the 2% tax on the revenues of multinational technology companies "risks stifling entrepreneurialism and innovation, which recent governments have done much to encourage".

'So we will now introduce a UK Digital Services Tax.

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.

In Italy, a "web tax" of 3.0 percent was adopted by lawmakers past year but the new government has changed tack and said it prefers to wait for EU-wide regulation.

"The UK has been leading attempts for worldwide corporate tax reform. but progress is painfully slow", he continued.

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