Tech giants face new UK tax crackdown


FE Team | Published: February 23, 2018 11:16:33 | Updated: February 24, 2018 20:39:10


Tech giants face new UK tax crackdown

Some of the world's largest technology firms are facing hefty new bills as the UK government moves to fundamentally change the way they are taxed.

Google and Facebook are braced for significant changes in the tax system after the Treasury told the BBC that a new tax on revenues was the "potentially preferred option".

It would open up the firms' huge UK sales numbers to the tax authorities.

At the moment, tax is levied on profits, a much smaller figure.

Google, for example, said it made sales £1 billion revenue in the UK in 2016 and a pre-tax profit of £149 million.

It paid taxes of £38 million - significantly higher than previous years after it changed the way it accounted for its activity in the UK.

If the government taxed a proportion of those sales its tax bill would be likely to increase significantly.

It would have a similar impact on a company such as Facebook, which is also highly profitable and also increased the amount of tax it pays in the UK.

All the companies that have faced controversy have also made it clear that they abide by the present tax rules.

The Financial Secretary to the Treasury told BBC news agency that large digital companies should pay a "fair" amount of tax.

"At the moment they are generating very significant value in the UK, typically through having a digital platform with lots of users interacting with that platform," said Mel Stride.

"That is driving a lot of value, so you're looking at social media platforms, online marketplaces, internet search engines - where at the moment the tax regime is not taxing those activities fairly.

"We want to move to a situation where we are taxing those activities fairly."

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