Drop Google Tax For Trade Deal with the US

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December 14th 2019
Tax Week 37
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Drop Google Tax For Trade Deal with the US

Boris Johnson has been warned a US trade deal condition includes scrapping any 'tech' taxes on large US companies diverting profits out of the UK.

The US has already shown its cards on how it treats territories that are willing to stand up against the predominantly large US companies that pay strikingly low amounts of tax in profits generated there.

Companies such as these apply the practice of moving profits generated in higher taxed territories like the UK to lower taxed territories like Ireland, Luxembourg or similar.

France has been the first to receive a reprimand from Trump's administration with warnings of tariffs and trade restrictions. France's crime? It passed into law a GAFA tax (Google, Apple, Facebook and Amazon) to impose a blanket 3 percent levy on US tech companies trading in France and likely diverting profits. Trump's response? Tariffs on French wine.

In our previous article regarding France's woes with the US, we speculated that the UK could suffer a similar fate if new trade deals need to be negotiated as a result of Brexit.

The UK has long had plans for a Digital Services Tax. The tax would increase the revenue received from companies like Google and Facebook to well over the current £65 million a year.

The new UK Prime Minister Boris Johnson is now feeling the heat in attempts to secure a US-UK free trade deal in event of a no-deal EU exit. The Trump administration has already made it clear that the 'Digital Services Tax' would need to be scrapped as part of any trade deal with the United States.

Johnson has previously stated, just a month before winning the leadership contest, that he was pro-Digital Services Tax and understood the need to make sure revenue raised by these companies within the UK should be subject to proper UK taxes.

As per the current schedule, the Digital Services Tax 'should' come into affect this Autumn. Johnson is replaying to the public that one of the biggest benefits of leaving the EU without a deal is a possible better trade deal with the US - the reality however could be the opposite.

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