United Kingdom gov introduces Digital Services Tax aimed at Amazon, Facebook and Google

Gladys Abbott
November 1, 2018

The proposal would see US 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 lead opponent Ireland says a growing number of countries are grumbling about hidden problems with the tax, including that it could inadvertently snag European companies.

"Given the dominance of the U.S. tech giants, it is hard to see the Trump administration taking kindly to the digital sales tax as the United Kingdom sets out its stall for the best possible trade deal with the USA", he said.

But the prime minister rejected such talk, saying: "We are not preparing for another general election".

Will Tech Start-ups Have To Pay This Tax?

UKHospitality chief executive Kate Nicholls said: "The funds raised by this new tax should be used to ease the unfair tax burdens being shouldered by hospitality businesses to help stop the continued devastation of high streets".

He said: "The Tories have once again chosen tax cuts for the richest in society, we will choose a fair, more progressive path and I will set out the details in the Scottish Budget on December 12".

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It is aimed, Hammond said, at "established tech giants" rather than startups, principally Amazon, eBay, Facebook and Google.

The rise of online shopping has been a major focus for critics of the existing tax system in recent months, with the likes of Tesco boss Dave Lewis calling for a level playing field between online and bricks-and-mortar retailers. According to research carried out by the campaign group Tax Watch, five of the biggest tech firms (Facebook, Google, Apple, Microsoft, and Cisco) strip the exchequer of £1 billion a year.

The Resolution Foundation think tank had said earlier its analysis showed the tax cuts would "overwhelmingly benefit richer households", with nearly half (45%) set to go to the top 10% of households alone.

He said the tax would be imposed on companies that were profitable and generated "at least £500m a year in global revenue". The plan covers many, but not all, of the core revenue streams through which the world's tech giants make their living.

On ending the benefits freeze, Mr McDonnell told ITV's Peston: "We will lift the freeze and we will make sure that from then-on people get a proper cost-of-living benefit on the freeze themselves".

In Scotland, the Higher rate is set at 41 pence and applies to salaries of £43,400, significantly lower than the position UK-wide.

As the government has been under pressure to control the rapid popularity of fixed odds betting terminals, which critics call the "crack cocaine of gambling", it was evident that the chancellor would face a deficit of £450m that the Treasury derives from them in tax and many predicted he would target online betting companies to address the balance.

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