UK to levy more tax from tech companies
Apple, Uber and Airbnb face being snared by British finance minister Philip Hammond’s tech tax crackdown.
The UK treasury last week unveiled a “digital services tax” that will impose a levy on Silicon Valley giants’ revenues. The 2% tax is being imposed on advertising revenues from search engines and social networks, as well as commissions from “online marketplaces ”— apps and websites that connect sellers and buyers.
Amazon and eBay appear to be the most likely victims, but the policy will apply to online services as well as to goods, sources said.
The treasury declined to speculate on the companies to fall under the tax. However, a treasury paper published in March listed App Store and the sharing economy as likely to be affected by a marketplace tax.
The UK government is apparently still looking at these areas.
THE TAX WILL APPLY ONLY TO PROFITABLE COMPANIES THAT MAKE GLOBAL REVENUES OF MORE THAN £500M
Uber and Airbnb, as “sharing economy” entities, do not sell their own services but act as gobetween for consumers, drivers or accommodation providers.
Although sales of Apple’s iPhones and other devices would not be affected by the digital services tax, its App Store connects developers and consumers, taking a commission of up to 30% on sales.
The treasury said the provision of online content and sales of television services will not be included, ruling out companies such as Netflix, which essentially owns the content it streams. If Apple takes ownership of the apps it sells, it could possibly avoid the tax.
The tax will apply only to profitable companies that make global revenues of more than £500m from the targeted activities, meaning that, if applied today, both Airbnb and Apple would qualify. Uber is not yet profitable.
Apple does not reveal how much it makes from the App Store in the UK, but its global revenues were estimated to be more than $10bn in 2017. Neither Airbnb nor Uber have revealed their UK revenues.
Apple, Airbnb and Uber declined to comment.