UK government muses tax on tech revenues, not profits

The UK government could be set to change the way technology giants are handled by the taxation system, according to BBC News.

The Treasury has confirmed that a new tax on company revenues is the “potentially preferred option.” Currently taxes are levied on profits recorded in the UK, which are much smaller than the revenues earned.

In 2016 Google made revenues of £1bn in the UK and a pre-tax profit of £149m. It paid taxes of £38m, a much higher figure than it paid in previous years, following publicity over its low contribution to the exchequer.

Financial Secretary to the Treasury Mel Stride said that tech companies should pay a ‘fair’ amount of tax: “At the moment [they] are generating very significant value in the UK, typically through having a digital platform with lots of users interacting with that platform.

“That is driving a lot of value, so you’re looking at the social media platforms, online marketplaces, internet search engines – where at the moment the tax regime is not taxing those activities fairly. We want to move to a situation where we are taxing those activities fairly.”

Tech companies have argued that they abide by the rules on taxation and have no responsibility to pay more than is required by law.

Eileen Burbidge of Tech City UK said: “I don’t think the multi-national tech companies have been any different than any other commercially minded business, in that they’re certainly willing to pay their fair share or their responsible share of tax.”