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Amazon and other tech giants under pressure as UK government quietly enacts digital services tax

The new law will levy a 2% tax on revenues earned by search engines, social media platforms and online marketplaces that have UK revenues of over £25mln

Amazon.com, Inc. - UK government to quietly enact digital services tax

One policy that was not trumpeted at the despatch box during Rishi Sunak’s budget is a UK digital services tax, which is due to be enacted on 1 April.

The new tax, originally announced in 2018, will tax revenues earned by “certain digital business” at 2% to ensure that the amount of tax paid in the UK reflects what the government says is “the value these businesses derive from their interactions with, and the contributions of, an active user base”.

The tax is designed to target search engines, social media platforms and online marketplaces that have UK revenues of over £25mln, a deliberate move to raise the bills of tech giants such as Amazon Inc (NASDAQ:AMZN), Google parent Alphabet Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB).

Amazon earned around £10.9bn from the UK in its 2018 financial year, meaning if in force at the time the tax would have increased its British tax bill by £218mln.

The UK government’s decision to quietly enact the new levy may stem from the fact that it is about to enter complex post-Brexit trade negotiations with the US, which fiercely opposed the policy when it was first proposed.

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