Autumn statement 2014: Government to introduce Google tax
Chancellor George Osborne delivered his last autumn statement before the general election today (3 December), a forecast that includes tougher restrictions on tax-avoiding from the multinationals.
The Chancellor used his statement to mount a renewed crackdown on tax avoidance by multinational companies that he claims will raise around £1bn over five years. Those companies diverting a significant portion of their profits from the UK through “complex arrangements” will be slapped with a 25 per cent levy, dubbed the “Google tax”.
It aims to “make sure that big multinational businesses pay their fair share,” added Osborne in the wake of the public outrage at companies such as Google, Amazon and Starbucks paying minimal taxes. Techniques such as registering intellectual property payments to holding companies and switching sales to lower tax jurisdictions have allowed global companies to exploit loopholes to minimise fees.
The levy backs the Chancellor’s threat earlier this year that that he would get tougher on companies using creative accounting techniques to lower their tax bills. Tax avoidance from multinationals has also drawn the ire of other European governments, which will likely lead to a wider set of counter measures being drawn up.
Elsewhere, the Chancellor's statement handed high-street stores a boost in their war against online retailers. Bricks-and-mortar retail stores are struggling to keep pace as footfall falls while online retail grows. It is estimated that 25,000 outlets have closed between 2000 and 2011, according to IMRG, while the likes of Amazon and eBay power ahead based on strategies of price, convenience and availability.
In recognition of its struggles to create a more competitive marketplace for high-street chains, the government is to push up the “high street discount” for around 300,000 shops, pubs, cafes and restaurants from £1,000 to £1,500.
The chancellor is also doubling the small business rates relief for another year, meaning 380,000 of the smallest high street players will pay no rates at all.
Ian Barber, communications director at trade body industry trade body the Advertising Association, said: "Encouraging investment in R&D is for nothing if innovation fails to reach the market. And it's clear that, when it comes to advertising and marketing, many SMEs lack confidence - a fact that is holding back their growth and export potential. So let's applaud these moves to help smaller businesses create and make. But let's tackle the missing link and give them more support to market."