Investors may have been disappointed by third-quarter numbers from the US technology giants, but UK tax collectors are likely to have been rubbing their hands with glee. Under Philip Hammond’s new tech tax, it’s the double-digit revenue growth reported at companies such as Facebook (US:FB.), Google-owner Alphabet (US:GOOGL) and Netflix (US:NFLX) that will be taxed rather than their characteristically lacklustre profits.
The proposal comes as regulators in Europe continue to grapple with plans to overhaul corporate tax laws, which have long been seen to favour digital companies. The UK – whose tax laws were written in 1965, 20 years before the arrival of the internet – is tired of waiting. Under the new scheme, technology giants that generate at least £500m of global revenue will be forced to pay a 2 per cent tax on the sales they generate in the UK. Mr Hammond said: “It is clearly not sustainable or fair that digital platform businesses can generate substantial value in the UK without paying tax here.”