Punishing UK for digital tax will harm US, IBM warns
IBM has broken with its tech rivals by urging Donald Trump not to retaliate against digital taxes in the UK and other countries.
The IT company told the US government that imposing tariffs on countries that attempt to force internet companies to pay more tax outside the US would damage the American economy.
Last month, the White House began a “Section 301” investigation into the digital services taxes being introduced in the UK, Italy, Spain, the EU and several other countries. The US says the taxes, which would apply to large tech companies, would mainly hit American businesses and may be discriminatory.
“We believe that the use of unilateral, retaliatory measures would carry serious risk for the broader US economy,” IBM said in a submission to the investigation, warning that “unilateral tariffs or other punitive trade or tax measures” would be likely to prompt “counter-retaliatory measures, negatively impacting multiple US sectors”.
The dispute was “principally about the insufficient payment – or non-payment – of taxes by a limited number of large internet-based” firms in the US, IBM said, but the fallout from imposing tariffs “would affect a very broad swathe of the US economy”.
The company urged the US to resume talks among the OECD group of rich countries, which had been working on tax reform before the US pulled out last month.
IBM would not be directly hit by the UK’s digital services tax, which applies a 2pc levy on revenues of search engines, social media services and online marketplaces, but its stance breaks with much of the US tech industry. Facebook and Amazon voiced support for an investigation into France last year.