UK says to proceed with digital tax despite US threat
“We plan to go ahead with our digital services tax in April,” Javid said at the Davos economic summit, as US Treasury Secretary Steven Mnuchin warned that Washington would look to retaliate with a tariff on EU auto imports.
Javid described Britain’s tax, seen as targeting especially US giants such as Amazon, Google and Facebook, as “proportionate” and “temporary”.
Addressing the annual World Economic Forum, he added: “It will fall away once there is an international solution.”
Also speaking in Davos on Wednesday, Mnuchin said: “If people want to arbitrarily put taxes on our digital companies we will consider putting taxes arbitrarily on car companies.”
Mnuchin has specified Britain and Italy, which has already introduced its digital levy on tech companies seen as paying too little tax, like nations at risk of US retaliation.
Austria introduced its own digital tax in January, but France has suspended its plans.
Presidents Emmanuel Macron and Donald Trump have agreed to extend negotiations on how to proceed until the end of the year.
France has said it would drop its tax if an international agreement is reached under the auspices of the Organisation for Economic Co-operation and Development.
OECD chief Angel Gurria has meanwhile urged Britain to “hold fire” on its tax, the BBC reported Wednesday.
Gurria added that in the absence of a globally agreed tax, there would be a “cacophony and a mess” with “tensions rising all over the place”.
Austrian finance minister Gernot Bluemel on Wednesday said that a meeting of EU finance ministers this week discussed the digital tax issue.
He told his country’s parliament that Austria had “always advocated an international solution on the digital tax, on OECD level or at least on EU level”.
Bluemel added that Austria had introduced its own tax at the start of the year to ensure a “level playing field and more fairness”.
In late 2018, former UK finance minister Philip Hammond announced plans to introduce a two-percent tax on profitable tech companies that generate at least £500 million (590 million euros, $654 million) a year in global revenues.
Britain’s tax was expected to raise £400 million per year.
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