Digital services tax: What the Budget 2018 announcement really means

Britain's Chancellor of the Exchequer Philip Hammond arrives in Downing Street in London

Britain's Chancellor of the Exchequer Philip Hammond arrives in Downing Street in London

Philip Hammond is set to unveil a commemorative Brexit coin to mark Britain's departure from the EU.

The digital services tax takes effect in April 2020. "We will consult on the detail to ensure that we get it right to ensure that the United Kingdom remains the best place to start and scale up a tech business".

However, Facebook and Google could plausibly argue that they operate primarily in the online advertising space, rather than social media (Facebook) and search engines (Google). The U.K. government expects to generate 400 million British pounds in new tax revenue as a result.

Hammond said that he is still committed to global corporate tax reform of these companies but said that progress was "painfully slow", meaning that the United Kingdom will introduce its own tax.

Technology firms have been heavily criticised over the low rates of tax they pay in the United Kingdom in recent years.

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Amazon, Google, Facebook and other technology behemoths could be hit by a new tax in the United Kingdom. The average salary at Google in the United Kingdom, furthermore, is said to be around £160,000.

"Tackling the digital tax question without coordinating efforts with the United States and European Union as key global partners will only further entrench Britain in an isolationist position we can not afford", he said.

The Daily Telegraph reports that the Chancellor unveiled a post-Brexit tax cut for 32 million workers and declared the era of austerity was "finally coming to an end".

The notion of digital taxes has been met with opposition from the tech industry.

In his Budget statement this afternoon, Chancellor Phillip Hammond revealed a two percent "digital services tax" on large tech firms such as Amazon, Facebook and Google.

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