Digital tax welcome news to industry

The tax would come into effect in April 2020 following a consultation, Philip Hammond stated in his 2018 Autumn Budget yesterday (29 October). The tax would raise £400m per year by 2022-23.

Large social media platforms, search engines and online marketplaces will pay a 2% tax on their earnings from UK users.

Tech giants

Hammond was keen to stress the tax would be on “tech giants” and not smaller start-ups, meaning it would only apply to companies that generate at least £500m revenue per year.

Online companies like Amazon have long been criticised​ for not paying enough tax despite receiving millions of pounds' worth in Government contracts each year and enjoying a boom in profits.

Publicans urged revenue from the tax be fed back into hospitality businesses to halt pub closures​ across the country.

Trade organisation UKHospitality welcomed yesterday’s announcement and echoed industry sentiment that the tax should be used to support pubs and as a “springboard” for further rates reform​.

High street woes

UKHospitality chief executive Kate Nicholls said: “The funds raised by this new tax should be used to ease the unfair tax burdens being shouldered by hospitality businesses to help stop the continued devastation of high streets.

“If the Government is serious about updating the rates system then we still need to see a thorough, root-and-branch reform of the whole system to ensure it is fair and fit for purpose in the 21st century."

British Beer & Pub Association (BBPA) chief executive Brigid Simmonds agreed: “We would urge the Chancellor to use the announced digital services tax to provide further support for all pubs large and small,” she said.

The Government said it was committed to negotiations with international organisations on reforms to corporate tax, signalling yesterday’s could be abandoned for a global alternative.