LONDON (Reuters) – Britain has altered its plan for a tax on the UK sales of online giants such as Google, Facebook and Amazon to prevent them from being double-taxed in cross-border transactions as other countries introduce similar levies.
Britain said last year it wanted a global tax but was ready to move on its own by taxing profitable companies at 2 percent on the money they make from UK users from April 2020. France’s Senate gave final approval to a tax on big technology companies on Thursday.
Big internet firms say they follow tax rules but many have paid little in Europe, typically by channelling sales via countries such as Ireland and Luxembourg which have light-touch tax regimes.
In an update to the planned legislation on Thursday, the British government said a number of other countries had now signalled their intention to introduce a Digital Sales Tax, potentially leading to double taxation on cross-border transactions.
“The government intends to limit the revenue from a marketplace transaction that is charged to the UK Digital Sales Tax (DST) where one of the users in relation to that transaction is located in a country which also has a DST that applies to marketplace transactions,” it said.
On Wednesday, U.S. President Donald Trump ordered an investigation into France’s planned tax, with a trade official saying they were concerned it could unfairly target U.S. companies. The probe could lead to the United States imposing new tariffs or other trade restrictions.
(Reporting by Kate Holton; editing by Stephen Addison)