UK to consider opposition to digital tax in pursuit of U.S. trade deal

Detail of a data screen with diverse apps as part of the interactive installation 'YOU:R:CODE' by Bernd Lintermann and Peter Weibel at the opening of the exhibition project 'Open Codes. Living in Digital Worlds' in Berlin, Germany, 13 March 2019. [EPA-EFE/FELIPE TRUEBA]

Britain said on Monday (2 March) it would consider opposition to its plan to impose a new digital tax on big tech companies like Google, Facebook and Amazon as part of its ambition to agree a free trade deal with the United States.

A 2% levy on the money major tech firms make from British users had been expected to be introduced next month.

It has been strongly opposed by Washington, however, which has said any such tax would be discriminatory and inappropriate.

“We note comments regarding digital taxation and will consider this as part of our policy development,” the British government said in its mandate for trade talks with the United States.

In January, U.S. Treasury Secretary Steven Mnuchin said the United States would retaliate against any unilateral move to tax the world’s biggest technology firms.

“If people want to just arbitrarily put taxes on our digital companies, we’ll consider arbitrarily putting taxes on car companies,” he said.

Asked about the digital tax on Monday, Prime Minister Boris Johnson’s spokesman said the government’s plans had not changed.

“We set out that it’s our intention to find a global solution to this issue. That is what we’re working towards. In the meantime we have put forward proposals for a digital services tax,” the spokesman said.

The Organisation for Economic Cooperation and Development (OECD) is working to develop international rules to make digital companies pay tax where they do business, rather than where they register subsidiaries. It wants to agree on the technical details of such a tax by July.

France had considered a similar digital tax, but it agreed in January to suspend down payments after Washington threatened to retaliate with tariffs on French wine.

Britain is likely to provide more details on its proposal when finance minister Rishi Sunak presents his budget on March 11. Asked if the tax was due to come in April, Johnson’s spokesman said: “I think that’s right”.

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