Chancellor says UK will press on with tax on digital giants despite US threat of ‘arbitrary’ reprisal

Written by Sam Trendall on 22 January 2020 in News
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Sajid Javid says tariff is ‘proportionate’ as US counterpart turns up the rhetorical heat

Credit: Christine Matthews/CC BY-SA 2.0

Chancellor Sajid Javid has vowed that the government will press ahead with its plans for a digital services tax, despite his US counterpart warning that the UK may face a retaliatory tariff on British companies.

During a panel discussion at the World Economic Forum taking place this week in the Swiss town of Davos, Javid is widely reported to have been asked if the government would implement the 2% digital services levy – even if it might face retributive tariffs for doing so

“We plan to go ahead with our digital services tax in April,” he said. “It is a proportionate tax, and it is deliberately designed as a temporary tax.”


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The chancellor added that the tax would “fall away” in the event that the US, UK and others could forge an “international agreement” on how to treat the likes of Google, Amazon and Facebook.

The government’s digital services tax proposes a levy on digital platforms equivalent to 2% of their UK revenue. The measure, which is designed to raise as much as £400m a year, was unveiled by Javid’s predecessor Philip Hammond during the 2018 budget

The tax is due to take effect from the start of the new financial year on 1 April.

The French government has proposed a similar measure. US representatives in Davos this week – including president Donald Trump and treasury secretary Steve Mnuchin – have indicated their intent to hold discussions on the matter with French and UK leaders.

Mnuchin took part in the same panel as Javid, during which he described the tax as “discriminatory in nature”. He warned that the US would consider retaliating in kind.

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

 

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Sam Trendall is editor of PublicTechnology

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