The UK will unilaterally implement a digital service tax if there is no wider international agreement soon on how to tax the world’s biggest Internet companies, Philip Hammond, Chancellor of the Exchequer, told the Conservative Party annual conference today.
“The best way to tax international companies is through international agreements but the time for talking is coming to an end and the stalling has to stop,” he said. “If we cannot reach agreement, the UK will go it alone with a digital services tax of its own.”
Hammond also announced a review of competition policy.
“Just as, in late 19th century America, concerns about the near-monopoly of Standard Oil and the railroad cartels led to the introduction of the world’s first anti-monopolies legislation,” he said, “so today, the expansion of the global tech giants and digital platforms, while of course bringing huge benefits to consumers, raises new questions about whether too much power is being concentrated in too few global technology businesses.”
The Chancellor has appointed President Obama’s former chief economist, Jason Furman, to lead an expert panel to review the UK’s competition regime, “to ensure it is fit for the digital era”.
Hammond added: “And it isn’t just competition policy that needs updating. The global internet giants must contribute fairly to funding our public services.
“And let me be clear today: the best way to tax international companies is through international agreements, but the time for talking is coming to an end and the stalling has to stop. If we cannot reach agreement the UK will go it alone with a digital services tax of its own.”
Speaking later at a fringe event, Hammond provided more detail: “You impute a value to the data that is gathered from U.K. consumers and the content that is uploaded by U.K.
“To do that you have to make two calculations. First of all, what part of the value the business generates overall is fairly attributable to the data from consumers as opposed to the value of the algorithms. Secondly, what proportion of the global business is in the U.K.
“You look at global reported profits and then you do a calculation and then you send a bill.”