The Strategist

Analysts: Solidarity with G7 will cost UK hundreds of millions of dollars

06/09/2021 - 04:01

A new G7 plan backed by London to tax international companies would allow US IT giants Google, Amazon and Facebook to pay less tax in Britain than they do now, says activist group TaxWatch, cited by The Guardian.

The study found that the changes could cost the UK’s coffers about 230 million pounds (around $325 million) a year from four major American IT firms. Facebook, Google, eBay and Amazon now pay around 330 million pounds (around $466 million) in digital services tax to the UK. The tax was introduced last year as a temporary measure until agreements can be reached at a global level.

If the G7 plan is implemented, tax deductions for such companies in the country would fall to around 100 million pounds ($141 million). The TaxWatch study is based on the companies' 2019 accounts, the most recent data available, as well as published official information on the G7 arrangements. "It looks like a good deal for the US, it will be able to collect more tax from its international companies and protect itself from them going offshore, taking the arrangements to a global level. The fact that Facebook and Google will end up paying less tax in Britain under this deal is controversial, I think there's no getting away from that. That's not what this was all about," noted TaxWatch director.

Meanwhile sources report that the UK and EU continue to discuss the possibility of more tax on US digital companies ahead of the next big reform event, the G20 summit.

The G7 countries reached agreement on changes to the taxation of large corporations at a meeting in London on 5 June. The agreement calls for companies to pay taxes in the markets where they sell. There should also be a minimum level of tax on profits of large companies of 15 per cent. Experts have already pointed out that there are omissions in the G7 deal, which, for example, could allow American Amazon to avoid new payments.