The UK government has proposed a new tax to help curb tax avoidance from large-scale US technology corporations.
Chancellor George Osborne dubbed the levy a ‘Google Tax’, and aims to recoup some 25 per cent of profits earned from the companies’ UK operations.
The plans are set to be outlined in full during next week’s budget, and could come into force as soon as next month.
The ‘Google Tax’ would be set higher than the current 20 per cent corporation tax rate.
This is largely because tax avoidance is particularly prevalent in the technology sector, as many companies divert their profits offshore to avoid paying tax in the UK.
It’s worth noting that the government will only be targeting large-scale operations with the tax. This will be achieved by only applying the levy to companies whose annual revenues total higher than £250 million.
The companies will also be required to tell the treasury how much revenue and profit they make in all countries they operate in. This is to ensure the companies can’t exploit loopholes to dodge UK taxes.
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Unsurprisingly, the tech companies affected aren’t too chuffed with the move, and have already spoken out against the Chancellor.
The National Foreign Trade Council declared its discontent to Osborne in a letter, arguing that the plans would negatively affect business in the UK.
The lobby group is based in the US and represents upwards of 300 internationally operating companies, including Google and Microsoft.
It stated: “The new tax seems to go against the declaration of Prime Minister Cameron that ‘the UK is open for business’.”