Hammond Wants to Gamble on Public Finances - Think Tank
Nov 01 2018
It is aimed, Hammond said, at "established tech giants" rather than startups, principally Amazon, eBay, Facebook and Google.
Beginning in 2020, the tax would be assessed on "digital services companies" that register minimum annual revenues of £500 million ($640 million) globally.
The proposal would see USA giant firms in the likes of Facebook, Google, and Amazon paying additional taxes in the United Kingdom aside from the taxes they are already paying in the countries where their main headquarters are operating. But progress is painfully slow.
That proposal, not yet enacted, appears to have been the basis for an addition to the 2018 Budget by Chancellor of the ExchequerPhilip Hammond, who announced a 'Digital Services' tax of his own late yesterday. Hammond said that the government expects to raise more than £400 million ($512 million) annually based on current revenues. "The Chancellor must promise that the newdigital services tax will not morph into an online sales tax in the future".
Speaking in the Commons on Monday, Philip Hammondsaid: "A new global agreement is the best long term solution".
However financial observers don't believe the new tax will worry the big guns too much.
In recent years, the internet giants of the U.S. have become known as much for creatively sidestepping the tax man as they have for innovative products and services, but the playing field is shifting.
He was quick to point out this tax was not an online sales tax on goods bought online which he said would impact consumers.
"But the worry for the tech giants, and their shareholders, is that this is the pebble that starts an avalanche of taxes from global governments", Hargreaves Lansdown analyst Laith Khalaf said.
With control over income tax rates and bands devolved to Scotland, Mr Mackay said while he would set out his plans for taxpayers north of the border on December 12, he pledged he would "choose a fair, more progressive path" than the Conservative Chancellor. We will consult on the detail to make sure we get it right, and to ensure that the United Kingdom continues to be the best place in the world to start and scale-up a tech business.
Nicola Sturgeon has been urged to rule out further tax rises after the Budget left her facing a "dilemma" over the widening tax gap between Scotland and the rest of the UK.
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.