The head of Britain's treasury has proposed a new tax targeting tech giants such as Google, Facebook and Amazon.com, in what he described as a necessary evolution of the corporate tax system in the digital age. 'Digital Platforms delivering search engines, social media, and online marketplaces have changed our lives, our society, and our economy, mostly for the better.
The U.K. government today announced plans to levy a "digital services tax" on major tech firms that could add up to hundreds of millions of dollars per year.
The flagship proposal in Hammond's Budget was the increase in spending on the government-funded National Health Service (NHS), set to increase by 20 billion pounds by 2023/24, the end of the Budget forecast period. He said that while a global agreement on how digital taxes shall be implemented would be an ideal solution to the issue, talks at a global level have been slow.
However, the industry warns that digital tax services could discourage tech investment. He told the Commons on Monday: "It will be carefully created to ensure it is established tech giants rather than our tech start-ups that shoulder the burden of this new tax".
In response, Spice said: "In the coming weeks, the Scottish Government will have a decision to make in terms of whether to move towards the United Kingdom higher rate threshold or not and whether to make other changes to its income tax policy".
The tax is projected to yield £5 million in 2019/20, but will steadily increase to around £440 million in 2023/24.
Will Companies Like Facebook and Google Be Affected? "This is not an online sales tax on goods ordered over the internet", he said, saying that such a tax would end up getting passed down to users.
Seen as critically important to supporting new businesses, critics said that the government should have been more willing to provide a helping hand to young companies struggling to scale-up, especially when 50% of start-ups fail within their first three years.
However financial observers don't believe the new tax will worry the big guns too much.
But 24 hours after his Budget it emerged the Chancellor plans to snatch back half of the £730 tax break handed to millions of workers by increasing national insurance contributions. Britain joins other countries who have embarked on the move to tax digital services, as countries keep in pace with the changing digital landscape and how businesses operate.
British MPs have previously criticised tech companies' tax arrangements as "immoral".
The tax will be paid by profitable firms that have at least £500m a year in global revenues and is expected to come into effect in April 2020, following a consultation.