There is a lot in the news at the moment regarding the latest Budget announcement from the Chancellor.

The part that captured our attention was the proposed ‘Digital Tax’ on giants like Amazon, Netflix and Facebook. This proposed ‘Digital Tax’ will make the UK one of the first countries in the world to bring in a levy to force tech giants to pay more tax.

Whilst individuals who read regularly in the papers about just how little tax giants like Amazon pay are delighted by this news, it has been blasted by industry leaders in the digital industry.

These digital leaders are claiming that it could make firms pull their investment from the UK. Something which is already a concern with Brexit looming in the near future.

The threshold for the digital tax will be £500 million which puts this tax out of the realms of most digital service providers and users.

At the same time, as this tax is not expected to come in until 2020, at which point these tech giants will be enjoying a 2% cut in their corporation tax. A very confusing announcement.

What will happen? Still unclear but we will be keeping an eye on it.

What is the Tax for?

In a nut shell, this digital tax is the online equivalent of the sales tax you might pay on physical goods in shops and restaurants.

When you purchase from brick and mortar stores and restaurants the tax you pay goes to the UK government, however, any tax you pay online is based on the country that the tech giant has their regional base. In most cases it’s a low tax haven such as Ireland, resulting in the UK government seeing very little in the way of tax from these tech giants.

Published: 2nd Nov 2018

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