Wednesday 10 March 2021 1:24 pm

Boris Johnson signals willingness for new UK online tax on internet giants

Boris Johnson has today signalled he could be open to a new online tax on tech giants like Amazon, while highlighting the taxation “discrepancy” between digital and bricks and mortar businesses.

Johnson said during Prime Minister’s Questions (PMQs) today that chancellor Rishi Sunak has “tried to address” the discrepancy “in an equitable way”.

Sunak has already said that he will use this year’s G7 meeting in Cornwall to rally other countries to lay the foundations for a global tax on multinational tech giants.

International agreement is needed on the tax as the Organisation for Economic Co-operation and Development (OECD) oversees treaties on how profits of multinationals are taxed.

Johnson was asked at PMQs by SDLP MP Claire Hanna why a “windfall tax” wasn’t levelled on companies like Amazon who have seen revenues soar during the pandemic.

“I think she’s making an important point on the discrepancy paid in tax by some online businesses and some concrete businesses,” he said.

“That’s an issue the chancellor has tried to address in an equitable way working with colleagues in the G7 and around the world.”

The Treasury unilaterally implemented its own digital services tax last year on online marketplaces, like Amazon and Asos, for the business they do in the UK, however the chancellor has said it is only a stopgap until when a global tech tax can be agreed.

“One of my priorities in the G7 this year, which I’ve already started work on, is to try and get international agreement on a new way to tax these companies,” Sunak said.

“I spend a lot of time talking to my finance minister colleagues around the world about this issue.”

Bricks and mortar companies have a higher tax burden than many online companies as business rates are based on the value of properties used in the course of business.

High Street businesses have also suffered in the past year as Covid restrictions have forced many to keep their doors shut or operate at a very limited capacity.

Chief executives from major retailers and supermarkets, including Tesco and Asda, last month called on the government to implement a new sales tax to level the playing field between bricks and mortar and online retail.

“Reducing business rates for retailers and rebalancing the tax system to ensure online retailers pay a fair share of tax would be revenue-neutral, provide a vital boost to bricks and mortar retailers and  support communities in need of levelling up,” they said.