A think tank has claimed that US tech giants Google, Facebook, Amazon and eBay could pay less tax in the UK than at present under a new agreement听signed by the G7.听
Finance ministers of the leading nations agreed the听global minimum corporation tax听at the weekend, which has a stated aim of preventing听tech giants听from avoiding tax.听
It will achieve this by cementing a 15 per cent global minimum corporate tax rate, which will听prevent听companies from听taking advantage of听tax havens.听
This will result in the collection of more tax from UK-headquartered corporations, but not affect US companies in any way.听听
Another part of the G7 agreement听– Pillar One –听aims听to听make听firms pay tax in the countries where they have users.听Analysis听from听Tax Watch听found听that听the new rules mean听Amazon, Facebook, Google and听eBay听would pay听equivalent or听less tax than they do at present听in the UK.听听
However, the concurrent dropping of the UK鈥檚 own听digital services tax, introduced last year, would result in听鈥渧ery substantial tax cuts鈥� here for American tech companies, according to Tax Watch.听
The听2%听levy on revenue generated from UK users听was expected to raise 拢500m听a听year听for the Treasury.听
It said听based on the companies鈥� 2019 figures, Google听would听pay听拢158.7m听less tax, while听Facebook鈥檚 cut would be听拢22.2m听and听eBay听would benefit to the tune of听拢11.9m.听
Amazon would not qualify听for this area of the agreement听as its profit margin is below the required 10%.听There are reports that the听G8听plans听to听change the rules to separate out business divisions, which would make Amazon Web Services eligible to pay tax as it has a margin of 25%.听听
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鈥淥ur analysis shows that for every company that is subject to the DST, the Pillar One proposals would lead to substantially less money being raised in taxation in the UK,鈥� Tax Watch said.听
鈥淚f the UK therefore goes forward with the removal of the DST, as the G7 communique strongly suggests it will, the package of reforms will lead to a net loss of tax in the UK from eBay, Amazon, Google and Facebook.听听
鈥淲hile not the only companies likely to see a UK tax reduction听as a result of the removal of the DST, these four are almost certainly the largest.鈥�听
A Treasury spokesperson said: 鈥淭he 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.听听
鈥淭he deal makes sure that the system is fair, so that the right companies pay the right tax in the right places.听
鈥淭he final design details and parameters of the rules still need to be worked through, and the OBR will analyse and publish the fiscal impacts in the normal way.鈥�听