The UK government has vowed to move forward with plans to implement a revenue tax on tech firms. This comes after France dropped similar proposals in the face of US pressure.
According to a recent announcement by French President Emmanuel Macron, an agreement had been made with the US to shelve the tax plan amid hopes that the OECD will reach an international agreement on the matter later this year.
However, when speaking at the World Economic Forum in Davos, chancellor Sajid Javid confirmed that the government plans to “go ahead with our digital services tax in April”. He added that “It is a proportionate tax, and a tax that is deliberately designed as a temporary tax. It will fall away when there is an international agreement.”
Responding to Javid’s remarks, the US treasury secretary Steve Munchin threatened to retaliate: “If people want to just arbitrarily put taxes on our digital companies, we will consider arbitrarily putting taxes on car companies. I’m sure the president and Boris [Johnson]will be speaking on it as well.”
Under proposals by the UK, digital service firms such as Facebook, Google and Amazon will have to pay 2 per cent in tax on their UK earnings. Though these plans were proposed by the last government, they were also featured in Boris Johnson’s election manifesto in December.
Countries such as France and UK planned to take unilateral action on the matter in 2019. This came after their efforts to create an EU-wide fiscal regime broke down due to opposition from Ireland. The hope was for the tax to generate as much as €5 billion a year across the bloc.
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