Boris Johnson Backs Digital Tax, Despite US Opposition

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Prime Minister defies US President Trump and insists British digital tax on US tech giants will proceed

Prime Minister Boris Johnson has pledged to press ahead with the implementation of a tech or digital tax on large Internet firms such as Google, Amazon and Facebook.

The move comes despite hostility from US President Donald Trump, as the European digital taxes mostly target US-based companies.

Earlier this week the United States government had, as expected, warned France that it may slap punitive duties of up to 100 percent on $2.4 billion in imports of champagne, handbags, cheese and other products.

US anger

The US Trade Representative’s office made the warning after France at the start of 2019 imposed a digital tax rate of 3 percent of revenue derived from French users. This affects foreign (mostly US) tech firms.

That move angered President Trump at the time.

“We’ve taxed wine and we have other taxes scheduled,” President Trump was quoted by Reuters as telling reporters, whilst sitting alongside French President Emmanuel Macron in London ahead of a NATO summit, on Tuesday.

“We’d rather not do that, but that’s the way it would work,” said President Trump. “So it’s either going to work out, or we’ll work out some mutually beneficial tax.”

British tax

But it seems as though the closest ally of the United States disagrees with the US President, after British Prime Minister Boris Johnson said he would press ahead with new taxes on US internet giants.

“On the digital services tax, I do think we need to look at the operation of the big digital companies and the huge revenues they have in this country and the amount of tax that they pay,” Johnson was quoted by Reuters as saying on Tuesday.

“We need to sort that out. They need to make a fairer contribution,” he added.

The stance of Boris Johnson on this is hardly surprising, as the UK has long planned to push ahead with its own national levies, ever since the budget of October 2018.

Although the UK has yet to set a date, the Conservative Party has committed to implementing a digital service tax on the revenue of companies if it wins this month’s national election.

Under the plan, tech companies that generate at least 500 million pounds a year in global revenue will pay a levy of 2 percent of the money they make from UK users from April 2020.

In July this year before he became prime minister, Boris Johnson backed a digital tax when he said that the government had to find a way to tax technology giants on their income.

boris tech hub2

Fair share

Companies such as Amazon, Facebook, Google and others have long been criticised for their tax practices that sees them reducing their tax bills by booking profits in low-tax countries (such as Ireland) regardless of the location of the end customer.

Spain and Germany are said to considering introducing thier own ‘digital tax’ on tech giants.

Italy is to implement its own digital or tech tax from January 2020, when it will implement a 3 percent tax on large-scale online sales beginning next year.

The European Union is also seeking to reach an agreement to implement a European digital services tax.

For their part, tech companies have previously defended their tax structures, and insist they abide by tax laws as they’re currently written.

Global tech tax rules meanwhile are set to be agreed by 2020, after an agreement in June from G20 finance ministers.

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Author: Tom Jowitt
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