A digital services tax on tech giants like Amazon and Google will go ahead in the UK despite opposing pressure from Donald Trump, Chancellor Sajid Javid said.
The US Treasury Secretary Steven Mnuchin warned the UK that its proposed two per cent levy on revenues of online marketplaces, social media platforms and search engines was views by the US as “discriminatory in nature”.
Speaking at the World Economic Forum in Davos today Mnuchin hinted that the US may impose retaliatory tariffs on the UK’s car industry if the tax went ahead.
“If people want to just arbitrarily put taxes on our digital companies, we will consider arbitrarily putting taxes on car companies,” he said.
Despite this Javid, who spoke alongside Mnuchin, said that he planned to “go ahead with our digital services tax in April.
“It’s important – as we said at the time when we first introduced it to Parliament and legislated for it – it is a proportionate tax,” he added.
“It is a tax that is deliberately designed as a temporary tax, it will fall away once there is an international solution.”
Last year France also briefly implemented a three per cent tax on digital companies with global revenues of over €750 million (£687 million).
This was quickly met by dramatic threats from Trump to impose 100 per cent tariffs on $2.4 billion of French goods including cheese and wine.
Prime Minister Boris Johnson has also been warned by the Organisation for Economic Co-operation and Development (OECD) to hold off on the tax and allow time for an international approach to succeed.