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| 'Google tax' to crack down on avoidance by internet firms in UK | 'Google tax' to crack down on avoidance by internet firms in UK |
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| Philip Hammond aims to raise £200m a year with measures targeting tech giants who route profits via low-tax countries | |
| Simon Goodley | |
| Thu 23 Nov 2017 06.00 GMT | |
| Last modified on Sat 2 Dec 2017 17.47 GMT | |
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| Internet companies that legally avoid taxes by shifting profits overseas face being taxed on royalties on UK sales in a move dubbed the “Google tax”. | Internet companies that legally avoid taxes by shifting profits overseas face being taxed on royalties on UK sales in a move dubbed the “Google tax”. |
| The measure, predicted to raise about £200m a year, forms part of the government’s latest package to tackle tax avoidance and evasion, which the chancellor predicted would raise a total of £4.8bn by 2022-23. | The measure, predicted to raise about £200m a year, forms part of the government’s latest package to tackle tax avoidance and evasion, which the chancellor predicted would raise a total of £4.8bn by 2022-23. |
| In his budget speech, Philip Hammond said: “Multinational digital businesses pay billions of pounds in royalties to jurisdictions where they are not taxed – and some of these royalties relate to UK sales. | In his budget speech, Philip Hammond said: “Multinational digital businesses pay billions of pounds in royalties to jurisdictions where they are not taxed – and some of these royalties relate to UK sales. |
| “So, from April 2019, and in accordance with our international obligations, we will apply income tax to royalties relating to UK sales, when those royalties are paid to a low-tax jurisdiction.” | “So, from April 2019, and in accordance with our international obligations, we will apply income tax to royalties relating to UK sales, when those royalties are paid to a low-tax jurisdiction.” |
| The move comes after international criticism of the taxes paid by huge digital businesses such as Google and Amazon, which route their profits through low-tax states. | The move comes after international criticism of the taxes paid by huge digital businesses such as Google and Amazon, which route their profits through low-tax states. |
| A recent study found Amazon paid 11 times less corporation tax in the UK than British bookstores. Last year, Google agreed a deal with British tax authorities to pay £130m in back taxes and bear a greater tax burden in future. | A recent study found Amazon paid 11 times less corporation tax in the UK than British bookstores. Last year, Google agreed a deal with British tax authorities to pay £130m in back taxes and bear a greater tax burden in future. |
| The push to claw more taxes from digital businesses came as part of the chancellor’s yearly assault on tax evasion and avoidance. | The push to claw more taxes from digital businesses came as part of the chancellor’s yearly assault on tax evasion and avoidance. |
| He said the government had secured £160bn in additional tax revenue since 2010, and that his latest steps would raise £4.8bn. The figure includes £2.3bn of additional tax revenues brought in after committing £155m in new resources for HM Revenue & Customs. | He said the government had secured £160bn in additional tax revenue since 2010, and that his latest steps would raise £4.8bn. The figure includes £2.3bn of additional tax revenues brought in after committing £155m in new resources for HM Revenue & Customs. |
| HMRC is also benefiting from having the time it has to investigate all offshore tax non-compliance extended to 12 years, in the Treasury’s response to offshore exposés such as the Panama and Paradise Papers. | HMRC is also benefiting from having the time it has to investigate all offshore tax non-compliance extended to 12 years, in the Treasury’s response to offshore exposés such as the Panama and Paradise Papers. |
| The government will also publish a consultation on the proposal that designers of offshore structures that could be misused to evade taxes will be required to notify HMRC of these structures and the clients using them. | The government will also publish a consultation on the proposal that designers of offshore structures that could be misused to evade taxes will be required to notify HMRC of these structures and the clients using them. |
| Frank Field, the Labour MP who chairs the Commons’ work and pensions committee, and who has led a series of campaigns highlighting tax avoidance, said: “The budget offers the beginnings of a fightback against some of the most egregious and morally bankrupt methods of tax avoidance exposed by our campaign. | Frank Field, the Labour MP who chairs the Commons’ work and pensions committee, and who has led a series of campaigns highlighting tax avoidance, said: “The budget offers the beginnings of a fightback against some of the most egregious and morally bankrupt methods of tax avoidance exposed by our campaign. |
| “But taxpayers will expect a whole series of additional steps to follow, if this mega injustice is to be countered for good.” | “But taxpayers will expect a whole series of additional steps to follow, if this mega injustice is to be countered for good.” |
| Budget | |
| Budget 2017 (November) | |
| Tax and spending | |
| Alphabet | |
| Amazon | |
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