UK Chancellor Philip Hammond is considering a tax on digital companies as part of his autumn budget. The tax, dubbed the “digital services tax,” aims to ensure that tech giants such as Google, Amazon, and Facebook pay their fair share. This comes amid growing international pressure on these companies to contribute more to the countries in which they operate.
The tax is expected to be structured as a levy on revenue, rather than profit, to avoid the issue of tech companies minimising their tax bills by shifting profits abroad. The proposal follows the European Commission’s plan to impose a 3% tax on the revenues of large digital companies.
However, there are concerns that the tax could discourage investment in the UK. Critics argue that the tax should be part of a broader international effort, rather than a unilateral move by the UK. The Organisation for Economic Co-operation and Development (OECD) is currently working on a global approach to taxing digital companies, but progress has been slow.
Hammond has previously stated that the UK would be willing to go it alone if an international agreement cannot be reached. The Chancellor is set to announce his decision on the proposed tax in his budget speech on 29 October.
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