Trump and Johnson at NATO event

UK to pursue tech giant tax despite Trump grumblings

Image credit: REUTERS/Christian Hartmann/Pool

Prime Minister Boris Johnson has said that the government will continue with plans to impose taxes on American tech giants.

His Conservative Party has committed to introducing a digital services tax on the revenue of the largest internet companies like Google, Facebook and Amazon in the next parliament. Under the policy, tech companies generating at least £500m a year in global revenue will be required to pay a levy of 2 per cent of revenue generated from UK users, beginning in the 2020-21 tax year.

 “On the digital services tax, I do think we need to look at the operation of the big digital companies and huge revenues they have in this country and the amount of tax that they pay,” said Johnson, according to a BBC report. “We need to sort that out. They need to make a fairer contribution.”

The tax was first proposed by former Chancellor Philip Hammond and could begin by raising almost £500m a year.

These multinational tech companies have been criticised for arranging to pay small amounts of tax in the countries they operate, despite staggering revenues. While some lawmakers have called for an international agreement to resolve the issue, some countries are exploring unilateral options such as a digital services tax.

France is leading the way by imposing a 3 per cent levy on digital companies with revenue above €750m (£670m), of which at least €25m is generated from French users. The tax, which will be backdated to early 2019, could raise €400m in its first year from mostly American companies. The introduction of the tax has drawn ire from US President Donald Trump, who this week threatened to impose enormous tariffs on French goods in retaliation, including 100 per cent tariffs on £1.8bn of cheese, Champagne, handbags, and other French exports.

“We’ve taxed wine and we have other taxes scheduled,” said Trump, ahead of a Nato meeting hosted in Watford. “We’d rather not do that, but that’s the way it would work. So it’s either going to work out, or we’ll work out some mutually beneficial tax.”

Trump has indicated that other countries considering a digital tax would face similar retaliation.

Other UK parties have announced measures to curb the power of foreign tech giants. The Labour Party has included a tax on multinationals in its manifesto (later specifying that companies affected would include Amazon, Facebook and Google) as well as promising to introduce a “charter of digital rights”, while the Liberal Democrats have proposed regulating tech giants from within the EU.

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