Budget 2017 – Tech giants like Apple, Google and Spotify could be targeted as chancellor unveils tax crackdown
Crackdown comes amid concerns multinational digital companies aren't paying their fair share of tax
SOME of the world's largest tech companies could be getting a call from the taxman following today's Budget.
In his speech to the Commons, Chancellor Philip Hammond pledged to crackdown on multinational online businesses that shift royalty payments on their UK sales to low-tax countries off-shore.
The plans will come into force in April 2019 and the Treasury aims to raise about £200million from the new tax.
The Treasury said it's concerned firms are avoiding tax by holding some of its intellectual property in low-tax countries, which is then used to sell to UK consumers.
It wouldn't confirm what companies could be affected but it is thought that Apple, Google and Spotify could be among the firms that are being looked at.
Hammond told the house the action wouldn't solve the problem completely but would "send a signal of our determination" to crackdown on the issue.
He 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.
"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 amid increasing concern that some firms aren't paying their fair share of tax.
Earlier this month it was revealed that Apple shifted its off-shore profits to the Channel Islands because of a tax crackdown in Ireland.
And online retailer Amazon has been ordered to repay £222million to Luxembourg after the online giant was found to have received favourable tax perks in the country.
Mr Hammond also announced that online marketplaces will be jointly liable with sellers for VAT in order to address online VAT fraud, which costs the taxpayer £1.2billion a year.
He said this would ensure “sellers operating through them pay the right amount of VAT, just as we would expect traditional retailers to do”.
Kate Ison, senior associate at Berwin Leighton Paisner, said the announcement is set to see a swathe of HM Revenue and Customs investigations over the next year.
She said: “Tackling offshore tax avoidance remains high on the political agenda.
“The Government has confirmed its intention to introduce new rules to tax royalties on UK sales where those royalties are paid to a low-tax jurisdiction.
“In the short term, we can expect investigations by HMRC into digital businesses to increase.”
We pay for your stories! Do you have a story for The Sun Online Money team? Email us at [email protected] or call 0207 78 24516