The Financial Secretary to the Treasury has indicated that the government is preparing to go ahead with a tax on the revenues of large digital businesses, which was the government’s preferred ‘interim’ option in its recent consultation on corporate tax and the digital economy.
In an interview given to the BBC, Treasury minister Mel Stride reiterated the message given in the government’s recent consultation on ‘Corporate tax and the digital economy’, that a tax on revenues was ‘the potentially preferred route to go’. He said that if an international solution working with the OECD proved too complicated, the government was prepared to ‘unilaterally enter into various changes’.
The minister spoke of the activities of large digital companies ‘generating very significant value in the UK’, but that ‘at the moment the tax regime is not taxing those activities fairly’.
‘We want to move to a situation where we are taxing those activities fairly’, Mr Stride said, adding that digital companies would pay higher levels of tax in a ‘number of cases’. The minister was mindful, however, of the need to avoid measures ‘that would harm smaller start-ups or companies that were still battling to make a profit’.
The government continues to believe that the best long-term approach to taxing multinational digital businesses is through coordinated international action involving multilateral reforms in the OECD context. Nevertheless, like the European Commission, the UK and other EU member states are also considering unilateral measures as ‘interim solutions’.
Last week, EU taxation commissioner Pierre Moscovici hinted at a ‘simple, stop-gap measure at EU level’. The Commission will present its proposals in March for the ‘fair and effective’ taxation of the digital economy.
Pascal Saint-Amans, the OECD’s director of taxation, was quoted as saying unilateral measures ‘may trigger some form of tax wars’. He acknowledged the political pressures governments are under to act on the digital economy, but remained firmly of the view that the best long-term solution would be achieved through a collective approach, although ‘that's going to take time’, Saint-Amans said.
The CIOT voiced scepticism about interim measures in its response to the digital economy consultation paper. Such measures, the CIOT believes, ‘although intended to be for the short term would, in the end, stay for the longer term’.
Glyn Fullelove, chair of the CIOT technical committee, said: ‘given the range of different business models and the changing economy we think it will be extremely difficult if not impossible to design the rules so that they capture the intended targets without also drawing in businesses that are not intended to be affected.’
The Dutch government is considering the introduction of a new royalties tax from 2021, in an effort to ‘overturn the Netherlands’ image as a country that makes it easy for multinationals to avoid taxation’, the Dutch finance minister announced to parliament. The Financial Times reported that the royalties tax will be levied on businesses that pay royalties in another country with a lower tax rate, or in a jurisdiction that the EU has deemed non-cooperative.
Google New Zealand has recently confirmed its intention to move to booking New Zealand-sourced advertising revenues in New Zealand, rather than its current arrangement which sees these revenues booked in Singapore. In a letter to a parliamentary committee, the company said it was making the change in response to measures proposed in the Taxation (Neutralising Base Erosion and Profit Shifting) Bill currently progressing through the New Zealand parliament.
The Financial Secretary to the Treasury has indicated that the government is preparing to go ahead with a tax on the revenues of large digital businesses, which was the government’s preferred ‘interim’ option in its recent consultation on corporate tax and the digital economy.
In an interview given to the BBC, Treasury minister Mel Stride reiterated the message given in the government’s recent consultation on ‘Corporate tax and the digital economy’, that a tax on revenues was ‘the potentially preferred route to go’. He said that if an international solution working with the OECD proved too complicated, the government was prepared to ‘unilaterally enter into various changes’.
The minister spoke of the activities of large digital companies ‘generating very significant value in the UK’, but that ‘at the moment the tax regime is not taxing those activities fairly’.
‘We want to move to a situation where we are taxing those activities fairly’, Mr Stride said, adding that digital companies would pay higher levels of tax in a ‘number of cases’. The minister was mindful, however, of the need to avoid measures ‘that would harm smaller start-ups or companies that were still battling to make a profit’.
The government continues to believe that the best long-term approach to taxing multinational digital businesses is through coordinated international action involving multilateral reforms in the OECD context. Nevertheless, like the European Commission, the UK and other EU member states are also considering unilateral measures as ‘interim solutions’.
Last week, EU taxation commissioner Pierre Moscovici hinted at a ‘simple, stop-gap measure at EU level’. The Commission will present its proposals in March for the ‘fair and effective’ taxation of the digital economy.
Pascal Saint-Amans, the OECD’s director of taxation, was quoted as saying unilateral measures ‘may trigger some form of tax wars’. He acknowledged the political pressures governments are under to act on the digital economy, but remained firmly of the view that the best long-term solution would be achieved through a collective approach, although ‘that's going to take time’, Saint-Amans said.
The CIOT voiced scepticism about interim measures in its response to the digital economy consultation paper. Such measures, the CIOT believes, ‘although intended to be for the short term would, in the end, stay for the longer term’.
Glyn Fullelove, chair of the CIOT technical committee, said: ‘given the range of different business models and the changing economy we think it will be extremely difficult if not impossible to design the rules so that they capture the intended targets without also drawing in businesses that are not intended to be affected.’
The Dutch government is considering the introduction of a new royalties tax from 2021, in an effort to ‘overturn the Netherlands’ image as a country that makes it easy for multinationals to avoid taxation’, the Dutch finance minister announced to parliament. The Financial Times reported that the royalties tax will be levied on businesses that pay royalties in another country with a lower tax rate, or in a jurisdiction that the EU has deemed non-cooperative.
Google New Zealand has recently confirmed its intention to move to booking New Zealand-sourced advertising revenues in New Zealand, rather than its current arrangement which sees these revenues booked in Singapore. In a letter to a parliamentary committee, the company said it was making the change in response to measures proposed in the Taxation (Neutralising Base Erosion and Profit Shifting) Bill currently progressing through the New Zealand parliament.
