Chancellor of the Exchequer Philip Hammond has signalled that if the UK is unable to form international agreements over the way global internet giants such as Amazon and Google are taxed then the UK will set its own digital services tax
In his speech at the Conservatives annual conference, Hammond 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.’
Internet giants, such as Google and Amazon, have often come under fire about the level of tax they pay in the UK due to profit shifting and tax jurisdiction issues.
When Amazon’s annual accounts were filed at Companies House Amazon Web Services UK's accounts showed taxes fell to £155,000 from £404,000, while profits increased from £2.7m to £5m.
Attempts by the OECD Base Erosion and Profit Shifting (BEPS) action plan and EU efforts to introduce a digital services tax are still ongoing. However the UK did introduce a diverted profits tax unilaterally.
‘If the government wants Amazon to pay more tax it will have to change the rules – and it is fair to say that corporation tax rules were written before the age of global businesses, let alone massive online companies,’ said Heather Self, partner at Blick Rothenberg.
‘But any change would have to be agreed internationally – and that’s not going to be easy. Progress is being made but major change is not likely in the near future.’
In his speech, Hammond also reconfirmed plans to spend £100m on a joint project with the CBI and TUC on the National Retraining Scheme, first announced in November 2017.
Report by Amy Austin
