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Big tech businesses are a threat to the Digital Services tax

Chancellor Phillip Hammond says the UK will chase tech firm tax avoidance, even if it has to go it alone

3 Oct 2018

Chancellor Phillip Hammond thinks the expansion of global tech giants will be a threat to competition and could be detrimental to the Digital Services tax if they continue to dominate the market.

At the Conservative Party Conference this week, he noted how Google, Facebook, Apple and Amazon have once again avoided paying the tax they should be charged and said that the world should stop stalling when chasing up on the tax they owe.

"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," Chancellor Philip Hammond said. "If we cannot reach agreement, the UK will go it alone with a Digital Services Tax' of its own."

Hammond was one of 10 European finance leaders that called for the European Commission to take action and ensure businesses were responsible for paying the correct amount of tax they owe in each country they're doing business in. At the moment, these companies are only being taxed on the money they earn in low-tax countries.

He added that many operations these companies use to make money are also not included in the tax. But this has to stop, he said and if the UK has to go it alone with the so-called Digital Services tax, it will do so.

"Profits made through lucrative activities, such as selling user-generated data and content, are not captured by today's tax rules," Hammond added. "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."