View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Policy
October 2, 2018

UK Threatens Unilateral Digital Services Tax

"The time for talking is coming to an end and the stalling has to stop"

By CBR Staff Writer

Drawing a parallel with nineteenth century US railroad cartels, Chancellor Philip Hammon today warned that the “expansion of the global tech giants and digital platforms” poses a threat to competition and claimed the UK will unilaterally instigate a Digital Services Tax if multilateral discussions do not bear fruit soon.

digital services taxIn a speech to the Conservative Party conference, he said: “The best way to tax international companies is through international agreements, but the time for talking is coming to an end and the stalling has to stop. If we cannot reach agreement, the UK will go it alone with a ‘Digital Services Tax’ of its own.”

Philip Hammond was notably not among the 10 European finance ministers who signed a letter to the European Commission late last year calling for major tech firms to start paying a tax on revenues in any country where they do business, instead of being taxed on profits that they currently report in often low-tax countries.

Hammond added, meanwhile, that he has tasked President Obama’s former chief economist, Jason Furman, with leading a review of the UK’s competition regime, “to ensure it is fit for the digital era.”

Digital Services Tax: OECD, European Commission Efforts

The speech came as the Organisation for Economic Cooperation and Development (OECD) is attempting to develop – amid sustained disagreement among members on the shape of any proposal – international tax rules that can cope with digital firms that can shift sales and profits between jurisdictions with ease.

A March proposal from the European Commission meanwhile sought to leapfrog those efforts and establish a European tech tax.

See also: HMRC Record “Dismal” on £1.5 Billion Online Marketplace Tax Fraud

It noted: “Profits made through lucrative activities, such as selling user-generated data and content, are not captured by today’s tax rules.”

Content from our partners
How businesses can safeguard themselves on the cyber frontline
How hackers’ tactics are evolving in an increasingly complex landscape
Green for go: Transforming trade in the UK

“Member States are now starting to seek fast, unilateral solutions to tax digital activities, which creates a legal minefield and tax uncertainty for business. A coordinated approach is the only way to ensure that the digital economy is taxed in a fair, growth-friendly and sustainable way.”

In a later event, Reuters reported, Hammond said the tax would only apply to firms above a “quite substantial” size threshold and would involve putting a value on the content and data of British consumers as a share of the firms’ overall value and calculating what proportion of the business is based in the UK.

It is unclear if more detailed proposals will be forthcoming.

 

 

 

Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.
THANK YOU