Britain is likely to have to “press ahead on its own” with attempts to force technology giants to pay more tax in the jurisdictions where value is created, lawyers predicted yesterday.
Measures included in Philip Hammond’s spring statement yesterday intend to ensure that technology giants such as Google, Facebook and Amazon pay their fair share of tax where they generate income.
Lawyers predicted that the UK would push for international co-operation at the G20 summit next week in Buenos Aires. “Considerable momentum is building for a multilateral solution to the tax challenges of the digital economy,” Nick Gardner, a partner at the City of London law firm Ashurst, said.
However, he added: “Whether it can achieve its goal of obtaining an international consensus on an interim solution to taxing the revenues of digital businesses deriving significant value from UK user participation remains to be seen.
“If this solution is to be adopted soon, the UK still has a lot of work to do on the detail and may well have to press ahead on its own, like it did with the diverted profits tax, and hope other jurisdictions follow its lead.”
Referring to other areas of the chancellor’s statement, lawyers welcomed publication of a consultation on entrepreneurs’ relief for capital gains tax.
The Treasury wants to allow individuals to “bank” entrepreneurs’ relief where their shareholding falls below the permitted level, which is roughly 5 per cent, as a result of the company issuing new shares.
Camilla Wallace, a partner at the London law firm Wedlake Bell, said that the proposal would “help prevent the potential barrier to growth under the current rules, which might see affected, disincentivised individuals withdrawing their investment from the company in this situation”.
However, Wallace pointed out that the rules were not expected to apply until April next year, “which will not help those looking to realise their investment in the meantime, and this is disappointing. “Also disappointed will be trustees and beneficiaries of trusts that hold qualifying shares, as they have been expressly excluded from the proposed new rules.”
This article was originally published by The Times’ Brief on 14 March 2018. (£)