Pun­ish­ing UK for dig­i­tal tax will harm US, IBM warns

The Daily Telegraph - Business - - Business - By James Tit­comb in San Fran­cisco

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.

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