Tech giants like Amazon and Apple could soon be hit with a “digital services tax” in the UK after Chancellor Philip Hammond announced the country would “go it alone”.
Speaking to the Conservative Party conference yesterday, Hammond announced that the UK would impose a tax on tech giants aimed at levelling the playing field even if an international consensus cannot be made.
“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,” Hammond said.
“If we cannot reach agreement, the UK will go it alone with a Digital Services Tax of its own.
He added that the US was not “frankly onside with the agenda” making an international agreement unlikely.
This comes as a growing number of retailers call for reform in how taxes are imposed, with tech companies paying significantly less than their bricks-and-mortar retail counterparts.
Amazon’s UK tax payment was the lowest in five years after it slashed its bill by almost a third last year, despite the online retail giant nearly doubling profits.
According to accounts filed at Companies House, Amazon UK Services Limited incurred £4.6 million in UK corporation tax in 2017, £2.8 million less than the 2016 figure of £7.4 million. After deferring £2.9 million, the online retail giant only paid £1.7 million in tax.
Key retail figures including the New West End Company, which represents over 600 retailers in one of the UK’s highest tax brackets in London’s West End district, have called on the government to level the playing field.
Some have warned that the tax could hit the UK economy instead of the tech giants it is aiming at.
The Coalition for a Digital Economy’s Dom Hallas said: “The tech giants Hammond claims to be targeting are in fact best placed to deal with an increased tax burden. The true cost will be in hurting innovative British companies who want to develop at home then grow globally.”