‘Eyeballs’ policy may push up UK taxes for digital giants

GOOGLE, Facebook and other digital giants could be forced to pay more tax in the UK under a shake-up in international rules.

A rethink by the G20 – the group of 20 nations representing 85 per cent of the global economy – may result in an ‘eyeballs policy’, meaning the companies would have to pay extra tax in countries where they are used by the highest number of people.

This would mean the millions of people using services offered by the companies would be considered a big part of the value of the overall businesses.

Tax authorities currently have to make an assessment of where a multinational’s value is created to determine how much of the profit should be booked where. They are taxed according to where the underlying technology systems were created or where the intellectual property rights for those systems were based.

The ‘eyeballs policy’ is just one of the options being considered by the Organisation for Economic Co-operation and Development, which draws up recommendations for international tax rules, following a request from the G20 earlier this year.

Bill Dodwell, head of tax policy at financial services giant Deloitte, said no change would be introduced before 2020.

‘I think if people can find a way to measure “eyeballs” then it may be a means of valuing part of the service and attracting some form of tax charge.’

Giorgia Maffini, the lead economist on the OECD project, said it was too early to say what options would be adopted. She said: ‘We do not have a specific solution in mind.’