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UK seeks to balance digital tax and obtaining US trade deal

By Ramla Soni

A 2 per cent levy on the money major tech firms make from British users was expected to be introduced next month

The UK government has said it would consider opposition to its plan to impose a new digital tax on big tech companies such as Google, Facebook and Amazon as part of its plan to secure a free trade deal with the US.

A 2 per cent levy on the money major tech firms make from British users was expected to be introduced next month which has been opposed by Washington.

“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 US.

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

The UK at the time said that it would not back down.

“It’s a proportionate tax and it’s deliberately designed as a temporary tax, so it will fall away once there is an international solution,” said Sajid Javid, who was finance minister at the time but subsequently resigned.

Britain has said it wants a global solution to the issue of taxing digital firms, and it is involved in international discussions to find one.

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.

The UK is likely to provide more details on its proposal when Javid’s replacement, Rishi Sunak, presents his budget on March 11.

FURTHER READING: UK to go ahead with tech tax, despite threat from US

FURTHER READING: France and US in trade row over digital tax

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