In Brief

‘Shameless’ tech giants ‘exploit coronavirus to dodge tax’

Industry body calls for government to delay new levy by a year

Technology giants have been accused of exploiting the coronavirus pandemic to avoid paying a new tax that came into force this month.

TechUK, an industry lobby group which represents hundreds of technology companies, says the government should “look again” at the digital services tax and “give companies a bit more breathing space” by delaying liabilities for a year.

Antony Walker, the deputy chief executive, said: “The scope of the tax was dramatically extended last month with little warning, meaning that HMRC now expects many more companies across the sector to begin allocating resources to determine liability.”

The new levy, a 2% tax on revenues, is intended to counteract international companies moving their taxable profits offshore. It will apply to at least 30 companies with more than £500 million of global revenues. The Treasury expects it to raise £440 million annually by 2023.

Campaigners said that request from TechUK, which represents the big four of Apple, Facebook, Amazon and Google, was “distasteful” and an example of “egregious special pleading”.

Alex Cobham, chief executive of the Tax Justice Network, a campaign group, said: “This is completely shameless of the tech companies — even by their low standards.”

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The Times points out that the companies due to pay the tax - social media platforms, search engines and online marketplaces - are “among the few that are likely to prosper during the coronavirus crisis” as “more business is being directed online”.

The new tax has proven to be controversial in the US. Treasury secretary, Steven Mnuchin, said in January that it discriminated against US multinationals and warned there would be retaliation – probably a tax on UK car exports to the US.

Meanwhile, the Organisation for Economic Cooperation and Development is drawing up global tax rules for the digital economy. Once the new rules are approved, the UK has promised to scrap its tax and adopt the OECD standard.

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