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Britain to consider taxing digital giants' revenue

Reuters  |  LONDON 

By Paul Sandle

LONDON (Reuters) - Britain said it was considering taxing the revenues of companies like and until international tax rules are changed to cope with digital firms that can shift sales and profits between jurisdictions.

said on Tuesday he had published a paper setting out proposals for taxing global digital firms before a meeting with his counterparts later this week.

Big companies have previously paid little tax in Europe, typically by channelling sales via countries such as and Luxembourg, which have light-touch tax regimes.

Both and have changed the way they account for their activity in Britain, resulting in a rise in corporate tax paid.

But UK's tax charge for 2016, for example, was 5.1 million pounds ($7.09 million), only a modest increase on the 4.2 million pounds level in 2015.

Its revenue in Britain in 2016 was 842 million pounds.

"In the autumn we published a paper on taxing large digital businesses in the global economy and today we follow up with a publication that explores potential solutions," Hammond said when he delivered an update on the government's finances.

Late last year the government also raised the possibility of imposing new taxes on tech giants unless they do more to combat by taking down material aimed at radicalising people or helping them to prepare attacks. Britain suffered a series of Islamist attacks last year that killed a total of 36 people, excluding the attackers.

The government said on Tuesday it favoured reforming the international corporate tax framework, but acknowledged that achieving consensus and creating detailed proposals would be difficult.

"In the absence of such reform, there is a need to consider interim measures such as revenue-based taxes," it said.

Any changes would have to be targeted to protect start-ups and growth companies, it said, but it was clear that there was a challenge that needs to be solved.

"The current misalignment between where digital businesses are taxed and where they create value threatens to undermine the fairness, sustainability and public acceptability of the corporate tax system," it said, adding that it intended working closely with the EU and international partners on the issue.

TechUK, a group representing more than 950 tech firms, said corporate tax was highly complex, and the government needed to consider the risk of unintended consequences that could result from moving to a revenue-based tax approach.

"However, it remains the case that international cooperation and coordination are key," it said. "Unilateral action in this area continues to risk cutting across international efforts at the "

Britain also said on Tuesday it would consult on a new mechanism for collecting value-added-tax (VAT) for

($1 = 0.7196 pounds)

(Reporting by and James Davey; editing by David Stamp)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, March 13 2018. 21:42 IST