The United Kingdom is moving ahead of the EU as it will introduce a new digital levy that has been dubbed the “Google tax”, which was part of Chancellor of the Exchequer Philip Hammond‘s presentation of Britain’s 2019 budget – the first “Brexit budget “ – which hopes to raise £400 million.
“It is clearly not sustainable or fair that digital platform businesses can generate substantial value in the UK without paying tax here,” Hammond said.
The European Commission hopes to target companies whose worldwide revenue amounts of €750 million, or 3% of what they earn. That number is significantly higher than the UK’s plan to tax internet businesses with revenue of over £500 million.
Both the EU and the UK have been careful to avoid targeting startups.
For the UK government, their attempt to tax internet businesses may prove to be easier as a consensus is needed between the EU-27, At present, the Czech Republic, Ireland, Luxembourg, and the Baltic States are said to be opposed to the move.
In 2017, Amazon sharply increased its profits in the UK while reducing its corporate tax bill by 40%. From 2006 to 2011, Google paid $16 million in taxes on $18 billion revenue in the UK.
The Organization for Economic Cooperation and Development and the G20 have been brokering a global deal on corporate tax avoidance. Hammond, however, made clear that the UK would withdraw its national legislation if a multinational agreement was secured.