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Comment from techUK in response to the recent Treasury proposals on the taxation of digital businesses, originally reported by the BBC.

Commenting on the recent proposals by the Government around the taxation of digital businesses, Giles Derrington, Head of Policy, techUK said:

“It is worrying that Ministers are suggesting they will press ahead with these proposals so soon after the consultation closes. techUK and others have been clear in highlighting the significant problems with the Government’s plans and hope that the Treasury will take the time needed to reflect on potentially negative impacts of such a short-sighted proposal.

“The Government’s revenue-based digital tax creates a risk for smaller digital businesses. It would make it harder for UK-owned companies to turn a profit, grow and employ more people, and put them at a disadvantage against already established players in the market. The plan also risks treating companies offering similar services differently based on whether they exist on or offline. This could create perverse incentives and hamper the growth of the UK’s digital economy. The Chancellor has been clear that the success of the whole UK economy will rely on the tech sector continuing to grow - these proposals risk undermining that growth.

“The tech sector recognises the need for the tax system to evolve to deal with large multinational digital businesses, but this work can and must be done at an international level through the OECD. The UK creating its own quick-fix solutions will cut across international efforts and hamper the opportunity for a long-term solution that ensures that all countries receive an equitable distribution of tax from the tech sector.”