The UK government is pushing forward with digital tax plans after it faced pressure over perceived low levels of tax paid by technology giants in the UK.
The UK's chancellor of the exchequer, Philip Hammond outlined the plans yesterday (11 July). When in place, the proposed UK digital services tax will target "large digital businesses" that generate more than £500m in global revenue and more than £25m in UK revenue, upon which it will impose a 2% levy.
The digital tax will not apply to small businesses or those making a loss, protecting start-ups that are financially more volatile.
It will also not target tech companies that stream, broadcast or publish media like film or music, meaning Netflix, Spotify and Amazon Prime Video can rest assured that their businesses will be exempt from the tax.
The proposed tax was first mentioned in the October budget after concerns were raised that tech giants don't pay enough tax in the UK, in comparison to UK companies. While companies like Asda are paying a considerable £128.4m, the Silicon Valley giant Google pays a mere £49.3m and Amazon pays £4.6m.
The decision to press forward with the plans arrives despite the hostility France has received from the US after it recently announced similar digital tax plans.
Both the UK and France took matters into their own hands, implementing their own digital services tax after talks stalled at EU level.
On Wednesday (12 July) the French parliament decision to approve a law that would make France the first major economy to imposes the tax, led Donald Trump to order an investigation to the tax which would impose a 3% levy on the total annual revenues of tech firms.
Despite the US's threats to impose tariffs or other trade restrictions on France, the UK continued with its plans that will be implemented in April of next year.
The UK has said it will abandon the levy once an international agreement has been reached.