UK to roll out first-of-its-kind digital tax

UK to roll out first-of-its-kind digital tax

LONDON: The U.K. said it will move ahead with plans to introduce a first-of-its-kind tax on locally generated revenue by large technology firms—the most concrete attempt yet by an industrialized nation to rewrite the world’s tax code for the digital era.

The new tax comes as dozens of other countries are contemplating similar levies on digital services sold by companies such as Alphabet Inc.’s Google and Facebook Inc. These governments are hoping to capture more revenue from such services as economic activity increasingly shifts online.

At issue is how governments collect taxes from the handful of tech firms, many based in the U.S., that have morphed into global, digital consumer-services giants. As they have grown, governments outside their home jurisdictions have struggled with the digital nature of their wares in coming up with an appropriate level of local tax to levy.

Big American tech firms have been criticized for reporting relatively little of their profit in local jurisdictions, opening them up to scrutiny. An international effort among rich nations to help standardize how and where to tax these digital services has been progressing slowly. The U.K. on Monday said it could no longer wait. As part of its annual budget, it said it was moving ahead with a plan to begin a digital tax for large tech firms by 2020.

The government of Spain proposed a similar digital-services tax this month, but that measure requires parliamentary approval.


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