Chancellor insists tech tax will go ahead

The chancellor has insisted that the UK will go ahead with plans for a tax on BigTech companies this spring despite threats the US to impose “arbitrary” tariffs on UK car exports.

On a panel at Davos yesterday, Sajid Javid said: “We plan to go ahead with our digital services tax in April – it is a proportionate tax, and a tax that is deliberately designed as a temporary tax.”

The US treasury secretary Steven Mnuchin responded that the proposed digital services tax discriminated against US multinationals and warned there would be retaliation - hinting at a tax on UK car exports to the US - if the two per cent tariff was imposed.

“If people want to just arbitrarily put taxes on our digital companies we will consider arbitrarily putting taxes on car companies,” he commented, adding: “We’re going to have some private conversations about that and I’m sure the president and Boris will be speaking on it as well.”

At a separate press conference in Davos, president Donald Trump praised prime minister Boris Johnson and insisted his approach would result in a successful trade deal between the UK and US after Brexit – although he too has expressed its displeasure over the government’s digital tax plans, which are viewed as a targeted attack on the likes of Google, Amazon, Facebook and Apple.

A statement from the UK government later clarified: “Imposing additional tariffs would harm consumers and businesses on both sides of the Atlantic - we feel [the digital tax] is a proportionate step to take in the absence of a global solution - we made our own decisions in relation to taxation and will continue to do so.”

Earlier in the week, France - which had been planning its own three per cent tax on US tech firms - announced a temporary truce with the US, while it gives the Organisation for Economic Co-operation and Development (OECD) the chance to agree a global deal. The US had threatened to impose retaliatory tariffs on French goods, but will also now suspend that tax plan.

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