The Courier & Advertiser (Fife Edition)
Tech giants facing £400m hit as Budget eases high street pain
Amazon and Google are facing a £400 million hit after a new targeted tax on online giants was revealed in the Budget.
As part of a package of measures designed to ease the burden on beleaguered UK high streets, the new 2% UK digital services tax will come into force in April 2020.
It will only be paid by profitable companies which generate at least £500 million a year in global revenues.
“The rules have simply not kept pace with changing business models,” the chancellor said.
“And it’s clearly not sustainable, or fair, that digital platform businesses can generate substantial value in the UK without paying tax here in respect of that business.”
Mr Hammond has previously said the government was looking at improving “fairness”, but wanted to focus on companies whose business models were “exploiting either the personal data of UK consumers or exploiting content which is uploaded by UK consumers”.
Shares in US-listed Amazon dropped almost 5% following the announcement.
The group – which operates a major fulfilment centre at Dunfermline and last week announced plans to recruit 2,000 seasonal workers for the site this Christmas – declined to comment on the chancellor’s announcement last night.
Stock in Netflix and Google also moved lower as jittery investors digested the news.
The rise of online shopping has been a major focus for critics of the existing tax system in recent months.
Tesco chief executive Dave Lewis – who was forced to shut the loss-making Tesco Direct earlier this year – called for a level playing field between online and bricks-and-mortar retailers.
However, Carolyn Fairbairn, director-general of the CBI, said the new tax was a “high-risk” move.
She said: “The government should move in step internationally, leading multilateral solutions, or risk losing our global competitive edge in digital.”
The rules have simply not kept pace with changing business models. CHANCELLOR PHILIP HAMMOND