Taxing the tech giants

Peter Stevens explains the UK’s interim position in relation to the digital services tax

Many countries are concerned that the profits-based international tax system is ill-suited for the digital world, where tech giants such as Google, Facebook and Amazon generate significant value from dealing with consumers in their countries but are able to organise their group structures in such a way that the profits resulting from those dealings are deemed to arise elsewhere. The OECD and the EU have been working on solutions but, in his October 2018 budget speech, Philip Hammond announced that progress was ‘painfully slow’ and that the UK would introduce its own digital services tax (DST) in the meantime, as it was not sustainable or fair that digital platform businesses can generate substantial value in the UK without paying tax here.