Philip Hammond, the chancellor of the exchequer, announced the new tax plan when he announced the 2018 budget, which will take effect in April 2020. According to Hammond, the UK government is expected to levy 400 million euros ($512 million) a year in new taxes on the current revenues of these technology companies.
Hammond said in Parliament: If you want to keep up with the pace of the digital economy, the rules of the game must be improved now. Digital platforms that provide search engines, social media, and online markets have changed our lives, our societies, and our economies, mostly for the better. But they also pose a real challenge to the sustainability and fairness of our tax system, and these rules are not keeping pace.
Hammond added: The UK has been taking the lead in reforming the international corporate tax code, but progress has been painfully slow. We cant go on talking endlessly, so we are now deciding to introduce a digital service tax. He went on to say that the narrow scope of the tax is also aimed at a specific pattern. This is not an online sales tax on goods ordered over the Internet, because the latter will eventually pass on to users, Hammond said. And the digital services tax will be paid by profitable companies that earn at least 500 million euros ($640 million) a year globally.
The Treasury says it needs to be clear that the British government wants big companies (not start-ups) to bear the tax burden. The new tax code represents a shift in the way businesses pay taxes: so far, big technology companies have been taxed on the basis of profits, but there are big problems because companies report profits differently and in many cases, even if the purchase of digital services takes place in the UK, they do not. Relevant records. At the same time, companies like Amazon and Apple are among the worlds largest, growing rapidly in recent years as people buy products from them.
Hammond also presents an interesting picture of the future, including how Britain intends to earn more income after leaving the EU and the wider tax code surrounding its existence. Hammond pointed out that Britain is currently working with the G20 and the OECD to consider how to levy taxes on digital companies, and if these negotiations are agreed, Britain may consider accepting the practices of these organizations rather than introducing its own tax plans. This shows that we are serious about this reform and that these global giants should pay reasonable tax rates, Hammond said. However, many people criticize the tax rate as still too low, saying that 400 million euros and 2% of the tax rate for these technology giants is a drop in the bucket. These are the worlds most profitable and well-funded companies, with the market capitalization of Amazon and Apple reaching $1 trillion. In addition, the UK tax issue has been discussed for years, so this may be just the beginning of the UK tax reform. (small) source of this article: NetEase science and technology report editor: Wang Fengzhi _NT2541
However, many people criticize the tax rate as still too low, saying that 400 million euros and 2% of the tax rate for these technology giants is a drop in the bucket. These are the worlds most profitable and well-funded companies, with the market capitalization of Amazon and Apple reaching $1 trillion. In addition, the UK tax issue has been discussed for years, so this may be just the beginning of the UK tax reform. (small)