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UK Announces Digital Services Tax on Tech Giants (itproportal.com)

Posted by msmash on from the paying-the-price dept.

Technology giants will have to pay more tax in the UK under new regulations unveiled by the local government today. From a report: In his budget statement this afternoon, Chancellor Phillip Hammond revealed a two percent "digital services tax" on large tech firms such as Amazon, Facebook and Google. From April 2020, large social media platforms, search engines and online marketplaces will pay a 2 percent tax on the revenues they earn which are linked to UK users. The tax follows increasing pressure from both the public and politicians to take action against multi-billion dollar firms paying low rates of tax in the UK. Both Google and Facebook have been criticised for paying little taxes in previous years, largely by centering their UK operations in Ireland to avoid higher charges. Revealing the tax in Parliament, Hammond said that it will be, "carefully designed to ensure it is established tech giants -- rather than our tech start-ups - that shoulder the burden of this new tax."

10 of 90 comments (clear)

  1. Shell games by Tablizer · · Score: 5, Informative

    It's becoming increasingly difficult to compute taxes for multinational corporations. Country B may not allow Country A to see enough info to compute a fair tax. It may be just easier to tax revenues instead of "profits", because money coming in and out of your own country is easier to monitor than trying to figure out what companies do and spend in other countries.

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    Table-ized A.I.
    1. Re:Shell games by youngone · · Score: 2, Insightful

      You could just not tax businesses at all

      That's been tried before. It ended in almost every country in Europe having a revolution, governments fell and people died.
      Have a good read about the revolutions of 1848. You will find that one of the triggers was the fact that in many countries the upper class (landowners and business owners) paid no tax. The costs of running the nations fell on everyone else.
      Did they spend their massive profits on more staff? Hilarious. Of course they didn't.

    2. Re:Shell games by Tablizer · · Score: 3, Insightful

      They tried that theory in Kansas a few years ago with terrible results: it blew the budget to heck. True, KS could go without roads, cops, and schools to balance the shrinking budget; but the people I know actually like civilization. If YOUR group wants to go back to the tax-free cave days, that's find by me; just don't do it where I live.

      One problem is that the USA no longer has many capital-intensive industries. Investments often don't return enough to justify them in the owners' minds, so the owners find ways to pocket the money themselves instead.

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      Table-ized A.I.
    3. Re:Shell games by UnknownSoldier · · Score: 2

      While that is a nice sentiment it is rather naive.

      Reality: CEO gets paid millions while the grunt workers doing, you know, the ACTUAL work get paid peanuts.

      e.g. Case in point Bezos and Amazon workers.

  2. Where is their income tax usually paid to? by presidenteloco · · Score: 2

    So Google makes corporate net income from ad revenue based on UK users. Presumeably pays corporate income tax on that, yes? To which country? Ireland currently?

    Is this going to be double taxation?

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    Where are we going and why are we in a handbasket?
    1. Re:Where is their income tax usually paid to? by Hognoxious · · Score: 4, Insightful

      To which country? Ireland currently?

      They tell Ireland that they pay it in the US. They tell the US that they pay it in the Netherlands. They tell the Netherlands they pay it on the moon.

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      Confucius say, "Find worm in apple - bad. Find half a worm - worse."
    2. Re:Where is their income tax usually paid to? by Anonymous Coward · · Score: 5, Insightful

      So Google makes corporate net income from ad revenue based on UK users. Presumeably pays corporate income tax on that, yes?

      Doubtful they are paying at the moment.

      Multinational corporations have gotten really good at finding places that have friendly tax laws, and having the corporation from one country pay another for the privilege of selling the product.

      It's like Hollywood accounting. Somehow, it's all very expensive and losing money hand over fist, and the profits have been laundered through several layers of corporate shells where with enough accounting bullshit none of them are profitable.

      Countries are now just starting to say "no, you made revenues in this country, you're going to pay taxes on that".

      About time I say.

  3. UK becoming pirates after leaving EU? by presidenteloco · · Score: 3, Insightful

    I guess the UK government is looking for emergency revenue sources now that the rest of the economy is going to be going away.

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    Where are we going and why are we in a handbasket?
    1. Re:UK becoming pirates after leaving EU? by Anonymous Coward · · Score: 2, Informative

      Like no government has ever raised taxes before.

  4. Why Just Tech Companies by CanadianMacFan · · Score: 4, Insightful

    Why are just some of the tech companies being targeted? I notice that Apple wasn't included in this list and they are one of the biggest users of these tax dodges. Starbucks is another. If you are going to go after companies that are playing loose with the rules then why not go after all of them?