UK government ditches proposed tax on Big Tech

The UK government has ditched its proposed tax on Big Tech after global reforms were agreed.

The tax, which was supposed to be generated through the likes of Facebook, Amazon and Google, was expected to generate billions.

The government last year launched a two per cent digital services tax on sales by search engines, social media platforms and online marketplaces, which netted the Treasury £300 million.

The tax came in as a way of responding to the concerns that Big Tech companies were making their money in the UK however shifting profits overseas to countries with lower tax rates.

This was however a temporary fix until there was a global solution in place.

READ MORE: China tightens screw on Big Tech with new data protection law

The new deal was signed by 136 countries earlier this month and is expected to come into play by 2023.

As part of the agreement, the world’s largest multinationals will be expected to pay their “fare share” of tax in markets where they do business and not just where they have their headquarters.

The new rules will apply to any firm with a profit margin above 10 per cent and a quarter of any profit made above that margin will be reallocated and subject to taxes where they operate.

G7 nations have also this earlier this year agreed to a global minimum corporation tax of 15 per cent.

“Following the landmark deal achieved earlier this month, I am delighted we have agreed a way forward on how we transition from our digital services tax to the newly agreed global tax system,” chancellor Rishi Sunak said.

“This agreement means that our digital services tax is protected as we move to 2023, so its revenue can continue to fund vital public services.”

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