Chancellor takes a bite of online giants’ royalties

ONLINE giants such as Google, Apple and Amazon will pay a tax on digital royalties to clamp down on tax avoidance and raise £200million a year.

Philip Hammond moved to add to the so-called Google Tax by pledging to charge income tax on royalties relating to UK sales, even when they are paid to a low-tax jurisdiction and would not normally be taxed in the UK.

But he admitted that the changes – which will apply from April 2019 – would only go some way towards evening out the tax treatment of digital companies and tackling tax avoidance.

The increased tax income from multinationals should raise £800 million over four years – £285 million in 2019/20, falling in each subsequent year to £130million in 2022/23.

The Budget statement said the payments would be due “even if the group has no taxable UK presence under current rules”.

It added: “It will prevent multinationals from gaining an unfair advantage by locating an IP [address] in low or no tax jurisdictions and so will level the playing field.”