UK Government Tax Hike For Tech Giants

March 6, 2018

Uk government considers revenue taxes on tech giants: The UK government is currently considering proposals to levy new taxes on tech giants operating in the UK. This is in addition to the OECD inquiry which is underway and will be producing a report into findings within the next few months. It’s possible that the chancellor will announce the changes in the Spring Budget, scheduled for March 13 2018.

Tech Giant Backlash

There have been ongoing issues regarding tax payments by companies such as Facebook, Google and Amazon for several years now. Google and Facebook have historically moved sales to bases in Ireland, in attempts to reduce levels of taxation. When George Osborne was chancellor he introduced the “diverted profits tax” to rake in revenue from companies moving revenues offshore. This has resulted in increased exchequer revenues between £200m and £300m, however, officials still deem this is too low.

Government officials point out that the major tech players are generating “very significant value in the UK, typically through having a digital platform with lots of users interacting with that platform”. One possibility under consideration is labelling the use of search engines as “bartering” as internet users have to exchange their information in return for company information, this would make it possible to levy VAT on transactions, even though no exchange of money actually takes place.

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Driving Value

Mel Stride, the financial secretary to the Treasury, has commented that user interactions with online platforms 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 these activities fairly“.

Tech companies insist they pay all due taxes and point out their increased UK investments in business premises and staff as evidence of their commitment to growing the UK economy.

The Treasury has indicated these potential new measures, known as revenue tax, will only target social media firms, search engines and online marketplaces which are all known to derive substantial benefits and value from customer data which is obtained via their free services. The practicalities of determining which businesses will face this tax seem enormous, however, as many businesses nowadays provide substantial online trading services.

Shareholders in some of the large tech companies could face losses if these proposals are enacted, and any share price bounces might affect a variety of businesses with a large online trading presence.


Telegraph – UK Tax overhaul for tech giants

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