US industry hits UK digital services tax

Representatives from the US tech industry on Wednesday (11 March) hit out at the UK’s plans to introduce a digital services tax from the beginning of April, following a period of uncertainty as to whether the UK would continue with the measures amid attempts to contract a US trade deal.

Trade associations have criticised the UK’s measures, which would see the government apply a levy on digital services with a global revenue of more than £500 million, £25 million of which would need to be generated from domestic users.

“At a time when the U.S. is poised to begin negotiations with the UK on a comprehensive free trade agreement, the UK’s decision to follow other countries in pursuing discriminatory taxes against U.S. exporters is unfortunate and will threaten the strong U.S.-UK trade-in-services relationship,” a statement from Matt Schruers, President of the Computer & Communications Industry Association read on Wednesday.

Meanwhile, Jason Oxman, President of the Information Technology Industry Council said that the UK’s intentions “stands to directly and disproportionately impact U.S.-headquartered tech companies.”

The UK government had previously said in its mandate for trade talks with the US that it “notes comments regarding digital taxation” highlighted by those in the US government, who have concerns that American companies will be unfairly hit by the levy.

The plans were first introduced in the 2018 budget, with draft legislation appearing in July 2019.

At the EU level, France, Spain, and Austria have all made their intentions clear with regards to pushing forward with a digital services tax, following failure to agree on bloc-wide measures last year.

In February, the Spanish Council of Ministers approved their plans in the field, while Austria’s Sebastian Kurz told Facebook CEO Mark Zuckerberg that European big tech companies should “contribute their fair share in taxes,” having already introduced their own 5% levy.

However, other European nations have come under direct pressure from the US to avoid making their own plans in the digital tax field. US ambassador to Czech Republic Stephen B. King warned Czech MPs against adopting the government’s proposal introducing a 7% digital tax towards the end of February, instead urging the Czechs to wait for an agreement at the OECD level.

The European Commission’er Vice-President for Digital, meanwhile, has previously that that the EU would look to push ahead with its own plans once again, should a broader agreement on the OECD stage become infeasible.

Despite this, EU plans are likely to falter once again in the future with tax legislation requiring unanimous agreement in the European Council. Nations such as Ireland, Finland, Sweden have previously voiced concerns over the plans.

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