Tech industry calls for digital services tax delay

The UK’s tech industry is calling on the government to delay its digital services tax during the Coronavirus outbreak.

TechUK, which represents multinational tech giants including Apple, Google, Facebook and Amazon, is asking the government to “look again” at the new tax - which came into force this month - and delay liabilities until next year, according to reports in the Times.

The tax, set at two per cent on revenues generated in the UK by companies with more than £500 million of global revenues, is expected to raise £440 million by 2023. It is intended to crackdown on technology companies which shift online profits generated from customers in one country to lower tax jurisdictions.

The Treasury decided to forge ahead with its own tax on the revenues of tech giants including social media platforms, search engines and marketplaces, after international efforts led by the Organisation for Economic Co-Operation and Development (OECD) for a co-ordinated tax on the profits of large digital companies stalled last year.

The UK government has said that it will move to repeal the tax and implement rules in line with OECD recommendations once agreement has been reached by the end of this year.

TechUK argued that the tax threatens to overstretch the resources of the liable companies at a time of profound uncertainty for online industries, despite criticism that these companies are some of the few to profit from the surge in online activity - with the likes of Amazon launching major recruitment drives as they struggle to cope with increased demand.

The lobbying group called for “breathing space” during the Coronavirus period after the reach of the tax was extended last month and many tech companies raised concerns they face double taxation during the UK’s Brexit transition period.

Antony Walker, the deputy chief executive of TechUK, said: “The scope of the tax was dramatically extended last month with little warning, meaning that HMRC now expects many more companies across the sector to begin allocating resources to determine liability.

"This is all at a time when, due to COVID-19, resources are stretched and future revenue is uncertain, the government is creating a large degree of uncertainty; it would therefore be wise to seek to look again at how the tax has been designed and how and when it should be implemented.”

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