The UK is set to introduce a new tax on large US tech firms, despite pressure from the US and the Organisation for Economic Cooperation and Development (OECD) to suspend plans to introduce the tax.
Chancellor Sajid Javid has reportedly told a meeting at the World Economic Forum in Davos that the UK will introduce the tech tax, with France recently suspending a similar tax after the US threatened levies on French exports.
The tax is set to target firms that conduct a significant amount of business in the UK but that don’t pay taxes based on their sales, which includes firms such as Facebook, Apple and Amazon.
The OECD recently called for countries to ‘hold fire’ over the tax, with the organisation attempting to broker a worldwide agreement over the potential new tax, warning that without a global solution to the situation, that there would be a “cacophony and a mess” of 40 countries going their own way.
Sajid Javid has stated that the UK would like an international agreement to be made, but that he still plans to press ahead with the introduction of the tax in the UK, which will come into effect in April 2020.
Any ‘digital sales tax’ could have implications for trade agreements with the US post-Brexit, with fears that the tax could undermine any negotiations.
A statement from HM Revenue & Customs (HMRC) said: “We’ve committed to introduce our Digital Services Tax from April 2020. It will be repealed once a global solution is in place.”