Britain’s Chancellor of Exchequer Philip Hammond has announced that tech giants like Google, Facebook and Amazon will pay more taxes of more than $500 million a year from 2020.
Announcing his annual budget on Monday, Hammond, who is the top finance and economy authority in the United Kingdom, said new sales tax, dubbed “digital services tax”, will be imposed on US technology firms from April 2020.
He said the special tax was meant to make sure “these global giants with profitable businesses in the UK pay their fair share”.
The finance minister said Britain had lost patience with ongoing international discussions for a deal on how to prevent multinational technology companies to avoid tax. He said Britain will unilaterally impose the tax on online firms that make more than £500m a year globally.
“A new global agreement is the best long-term solution. But progress is painfully slow. We cannot simply talk forever. So we will now introduce a UK digital services tax,” said Hammond, adding “The UK has been leading attempts to deliver international corporate tax reform for the digital age.”
Hammond said the new tax will be a “narrowly targeted” one which could generate up to £400 million annually.
However, the Office for Budget Responsibility, which feeds data for exchequers budget plans, said the new tax could raise a maximum of £30 million from each American company.
Many in Britain, including the opposition Labour Party, had criticized the government for its unfair tax system, saying giant tech companies based in the US were not paying their fair share of taxes in the UK, where they generate a huge income.
In a further blow to online businesses in the UK, Hammond also gave more than $1 billion to small high-street retailers to help them compete against internet businesses.