E-commerce giants face tax hike
30 October 2018 - 11:00 by Paul Tissington
This week’s budget saw the announcement of a new tax that will force some of the largest tech-based firms operating in the UK to siphon off some of their earnings to the treasury.
Chancellor Phillip Hammond confirmed the two per cent digital services tax would apply to organisations that make a minimum of half a billion pounds a year in the UK, meaning it will not only cover the likes of Google and Facebook but also major retailers like Amazon and eBay.
This tax will ultimately raise around £400 million annually once it is brought into force and is actually something of a surprise given that observers had predicted a sales tax would be brought in to cover purchases made via safe shopping online.
The upshot is that smaller outlets will not be hit in any way, while the larger retailers will face a slight increase in the amount they have to pay to operate in the UK each year.
Some industry insiders expressed concern that these new costs will ultimately be passed onto consumers. Although in the case of certain e-commerce and social networking platforms, this may not be an option.
Hammond went on to criticise the lack of action being taken internationally to make sure that the largest tech firms pay their way, saying that progress was not being made quickly enough and thus it was important for the UK to make its own changes to taxation to ensure such operations were not avoiding the responsibility to contribute.
The high street was also given a bit of a boost in the budget, with a reduction in business rates for smaller outlets and a £675 million pot set aside to fund the transformation of town centres across the country as the retail landscape shifts.