U.K. to implement digital tax

british pound
The new 2% tax on U.K. revenues will target "established tech giants."

International tech companies will face a 2% tax on their U.K. revenues, under a new plan introduced in the British national budget.

The proposed UK Digital Services Tax, which will come into effect in 2020, will be targeted at “established tech giants” rather than start-ups, Chancellor of the Exchequer Philip Hammond said in his budget announcement on Oct. 29.

“It’s clearly not sustainable, or fair, that digital platform businesses can generate substantial value in the U.K. without paying tax here in respect of that business,” he said.

“It is only right that these global giants, with profitable businesses in the U.K., pay their fair share towards supporting our public services.”

The tax will be paid by companies that generate at least £500 million (CAD $838 million) in global revenues.

Hammond said the U.K. will continue to work with the Organization for Economic Co-operation and Development and the G20 on a global technology tax agreement, and should one emerge before 2020, the U.K. might abandon its proposed Digital Services tax.

The announcement comes as governments around the world consider their own digital taxes and quotas. Earlier this month, the European Parliament voted to implement a content quota on VOD platforms like Netflix and Facebook, ensuring they commit at least 30% of their programming to content produced in the region.

Canada is currently in the midst of a review of the Broadcasting and Telecommunications actswith an aim to modernize the legislation for the digital age. In a report to the federal government, the CRTC recently recommended the government require internet service providers and wireless internet providers to contribute to the content funding system in the same manner as BDUs.

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