Last Updated: November 20, 2021
Experts have notified that US digital corporations such as Google, Amazon, and Facebook may pay less tax in the UK and other significant countries under the G7 global reforms agreed on over the weekend.
In a major stumbling point that emerged only days after the landmark agreement, data from the TaxWatch campaign group revealed that the UK Treasury stands to lose almost £230 million in taxes paid each year by four of the largest US tech corporations.
Concerning the report, Facebook, Google, eBay, and Amazon collectively pay around £330 million to the UK’s digital services tax — a fee for internet search providers, online retailers, and social media corporations. Last year, the tax was introduced as a temporary measure until a global agreement could be achieved.
According to TaxWatch, the G7 plan would reduce these companies’ UK tax bills to a little over £100 million.
As claimed by the Treasury spokesperson, the complete specifics of the regulations are still in preparation, and the impact on tax revenues will be reviewed by the independent Office for Budget Responsibility.
“The historic global tax agreement backed by G7 finance ministers reforms the global tax system to make it fit for the global digital age, achieving a level playing field for all types of companies. The deal makes sure that the system is fair so that the right companies pay the right tax in the right places,” he stated.
Although Facebook, Google, and Amazon will probably end up paying more taxes in total, the US Treasury will benefit the most. Under its own digital services tax, the UK will reclaim more revenue from its own substantial multinational corporations but less from the tech powerhouses.