Ahead of the national election in the UK this May, Chancellor George Osborne has proposed a ‘Google Tax’, a 25 percent tax on tech companies’ profits earned from their UK operations, reports The Sunday Times.
The proposal is an attempt to curb these companies’ tactics to avoid taxes, usually accomplished by diverting profits offshore. The ‘diverted profits’ tax may be included in the UK Budget, and is slated to come into force next month.
At 25 percent, the new tax is significantly higher than the standard 20 percent corporation tax rate — but it will be applied only to companies with annual revenues higher than $376 million (£250 million).
In addition, these companies will also be required to disclose revenue and profits on a country-by-country basis.
Whether the proposed tax and regulations will make a real difference is yet to be seen, but it’s likely that tech companies won’t take it lying down. The National Foreign Trade Council, a US lobby group that represents more than 300 multinationals including Google and Microsoft, said in a letter to Osborne, “The new tax seems to go against the declaration of Prime Minister [David] Cameron that ‘the UK is open for business’.”
➤ Osborne whacks US tech titans with ‘Google tax’ [The Sunday Times via TechCrunch]
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