Chancellor Sajid Javid has insisted that the 2% digital tech tax (first proposed in October 2018) will go ahead in April despite a threat that the USA will retaliate with taxes on UK goods, namely cars. The proposed tax would be on UK revenues of tech giants including Amazon, Facebook, Google and Apple.
- Above: US’ secretary of the treasury Steve Mnuchin.
It would be based on income from digital services such as advertising (displayed during online product searches) and entertainment streaming but not online sales (which the then Chancellor Hammond thought would be passed on to consumers).
At the World Economic Forum in Davos this week the US treasury’s Steve Mnuchin said: “If people want to just arbitrarily put taxes on our digital companies, we will consider arbitrarily putting taxes on car companies.”
Sajid Javid has also emphasised that the UK tax would be a temporary one to bridge the time until an internationally agreed digital taxation scheme is established.
Meanwhile, in a recent article in The Financial Times, Douglas Gurr, Amazon UK country manager has suggested that new costs may be passed on to small businesses that sell via Amazon. He commented: ““If you are not careful in the design, these taxes can actually directly hit all the small businesses that use our platform.” He elaborated: ““The majority of sales on our marketplace are independent businesses; if that tax is passed on to them, it’s quite a significant hit.”
* Those supporting the idea of new taxation on super-sized internet businesses include Bira (The British Independent Retailers’ Association) – the voice of independent cookshop and housewares stockists. One of five new resolutions for the UK government (as outlined by Bira ceo Andres Goodacre) is to start levelling the playing field between “traditional retailers and the giant internet businesses.” Andrew states: “For too long we have heard about a digital services tax but nothing concrete. The internet business have to contribute more as the vast majority of taxes paid by retailers is falling on those retailers with premises.”
Top: Chancellor Sajid Javid.
