Britain will end digital services tax on U.S. tech giants once global tax reform is implemented

The UK has agreed to phase out the Digital Services Tax (DST) on major US tech companies such as Amazon, Facebook and Google after a global corporate tax reform in 2023.

Treasury said On Thursday, the agreement between the two countries means that the United States will not impose retaliatory tariffs on the United Kingdom for imposing DST.

“We have agreed on a way to move from the digital services tax to the newly agreed global tax system,” Prime Minister Rishi Sunak said in a statement.

“This agreement means that digital services taxes will be protected during the transition to 2023, and that revenue can continue to fund critical public services,” he added.

The UK, US, France, Italy, Austria and Spain have all reached an agreement this week to move from domestic DST to new global tax transactions.

The Treasury said the new DST credit system will bridge the gap between the UK’s DST and the launch of a new global tax system scheduled for entry into force in 2023.

This agreement was reached this month after 136 countries agreed to set a global minimum corporate tax rate of 15% for multinational corporations.

This rule applies to global companies with a rate of return of at least 10%, 25% of the profits above the rate of return of 10% are reassigned and taxed in the country of business.

With this change, large multinationals, especially digital platforms, will now pay taxes not only in the country where they are headquartered, but also in the countries where they do business.

At the beginning of June G7 member countries also agree An overview of a global corporate tax agreement aimed at preventing multinational corporations from avoiding taxes by filing profits in low-tax countries such as Ireland and Luxemburg.

In June, the Fair Tax Foundation The largest tech company in the U.S. pays about $ 100 billion less in taxes More than stated in the annual report for the last 10 years.

According to the campaign group, “Silicon Six” (Amazon, Apple, Facebook, Microsoft, Netflix, Google owners Alphabet) paid about $ 219 billion in income tax between 2011 and 2020. Revenue. The report nominated Amazon and Facebook as the worst criminals in terms of tax avoidance. Researchers claimed that Amazon paid $ 5.9 billion in taxes between 2011 and 2020, with reported profits of $ 60.5 billion and revenues of $ 1.6 trillion.

DST in the UK will be introduced in April 2020 and will charge 2% of the total revenue of social media companies, search engines and online marketplaces. It was projected to deduct £ 300m from the Treasury in fiscal year 2020 and raise more than £ 2bn over the next few years.

The Treasury said Thursday that Britain would retain its revenues raised during daylight savings time until a new system known as “Pillar One” came into effect.

When that happens, starting January 2022, companies will be able to claim the difference between the tax paid under the DST and the tax they would have paid under the new system as credit for future billing. increase.

“The credit system provides a fair and sustainable solution,” said the Treasury.

Discussions will continue in the coming months as world leaders figure out how to implement the new tax system.

Britain will end digital services tax on U.S. tech giants once global tax reform is implemented

Source link Britain will end digital services tax on U.S. tech giants once global tax reform is implemented

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