The UK announced that it will follow the European Union’s lead in taxing major digital companies in the locations where they make money, rather than where they are headquartered.
The very week Brexit Secretary argued that the UK would not pursue a parasitic spiral of deregulation on the fringes of Europe, London provided Brussels with what may be considered a goodwill gesture after an announcement European Commissioner Pierre Moscovici announced that Brussels would focus on companies’ place of operation when looking into their tax obligations.
Giants like Amazon, Facebook, Google, and Twitter will be taxed for their revenues rather than “profits” in the UK, according to the financial secretary to the Treasury Mel Stride, a move that could dramatically broaden the UK’s tax revenue from the digital sector.
France has led a campaign to tax mainly US-based digital giants that have used a series of tax loopholes to avoid taxation laws in France. This political demand is not without stiff opposition, however, as Ireland and the Netherlands have expressed scepticism.
For the time being it appears that London appears has opted to make a key move in boosting the European Commission’s drive to crack down on tax dodgers.
According to the Financial Times, the fear is that US companies will now move to exploit the new taxation regime in the United States to “lighten” their taxation burden in Europe.