Budget 2018: Philip Hammond vows to go it alone with UK tax on tech giants
Philip Hammond has declared that Britain will go it alone with a major tax clampdown on big technology firms.
The Chancellor used his set-piece Budget statement today to flesh out plans to clobber "established tech giants" making over £500m with a "carefully targeted" new levy, and said the UK would press ahead even if no international agreement on taxing the the firms could be reached.
Countries have been grappling with ways to rake in revenue from technology companies over the past decade, with big social media and technology firms often employing complex international structures to lower their tax bills.
But Mr Hammond today declared that the "rules of the game must evolve", with tech firms now posing "a real challenge for the sustainability and fairness of our tax system".
"The rules have simply not kept pace with changing business models," he warned.
"And it’s clearly not sustainable, or fair, that digital platform businesses can generate substantial value in the UK without paying tax here in respect of that business."
The Chancellor confirmed plans - first floated at the Conservative party conference - for a new "Digital Service Tax", which he vowed would be "narrowly-targeted tax on the UK-generated revenues of specific digital platform business models".
And he confirmed that while the UK would continue to press for a "globally-agreed solution" to the problem of taxing big tech firms, its own levy would now come into force in April 2020.
"It is only right that these global giants, with profitable businesses in the UK, pay their fair share towards supporting our public services," Mr Hammond said.
The Treasury predicts that the move could net £400m-a-year for the public purse, but the Chancellor sought to reassure smaller firms that they would not be sucked into paying the charge.
He said: "It will be carefully designed to ensure it is established tech giants – rather than our tech start-ups - that shoulder the burden of this new tax...
"The Digital Services Tax will only be paid by companies which are profitabl and which generate at least £500m a year in global revenues in the business lines in scope."