Hammond: stalling on digital tax must stop

AMAZON, Google and other large technology companies will face a new “digital tax” amid concerns they are paying relatively little into the Treasury despite generating huge revenues, Philip Hammond has said.

The Chancellor said that the “time for talking has come to an end” and the “stalling has to stop” amid concerns that high street retailers face significantly higher tax bills.

At present tech companies are able to lower their corporation tax bills by legally channelling money abroad. The approach means they declare little profit in the UK, unlike high street retailers who book their profits in Britain.

Mr Hammond has been seeking international agreement on a new approach to taxing the companies but has been struggling to find a consensus. The European Commission is also trying to devise a common policy and has proposed an Eu-wide 3 per cent digital tax, but has faced opposition from some member states. Mr Hammond is now

‘Without international agreements the time for talking is coming to an end and the stalling has to stop’

threatening to take “unilateral” action, with ministers considering plans for a tax based on the revenues rather than the profits of internet giants.

He told the party conference: “The expansion of the global tech giants and digital platforms, while of course bringing huge benefits to consumers, raises new questions about whether too much power is being concentrated in too few global technology businesses. The best way to tax international companies is through international agreements, but the time for talking is coming to an end and the stalling has to stop.”

However, Carolyn Fairbairn, the director-general of the Confederation of British Industry, said: “Ideas such as a digital tax could backfire on entrepreneurs and the high street if developed without proper consultation and should go hand in hand with business rates reform.

“The UK’S approach to tax must reflect a fast-changing economy. Wherever possible, the UK must move in step internationally if we are to address the tax balance in a way that is sustainable and doesn’t damage the UK’S global competitive advantage.” Business: Page 1