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    Courtesy of the Times.


    Technology companies have warned the chancellor that they will pull post-Brexit investment from the UK if he goes ahead with a tax on digital sales in next week’s budget. Multinationals including Facebook, Amazon and Uber have written to Philip Hammond warning that they will reduce spending if he makes a “smash and grab raid” on their earnings. They have also warned that any attempt to impose a specific tax on mainly American digital multinationals would result in retaliation from President Trump. “Such discriminatory treatment against the US could be viewed as grounds for retaliation through the use of tariffs,” they said. “Given the range of retaliatory measures available, the impact on UK businesses operating overseas could be highly damaging.”

    Mr Hammond raised the prospect of a digital only sales tax in his speech to the Conservative party conference. There has been growing anger at the small rates of corporation tax paid by companies such as Facebook and Amazon in the UK. Last year, Facebook paid £5.1 million in corporation tax on reported sales of £842.4 million. Amazon’s corporation tax bill was £4.6 million on reported profits of £80 million.
    Britain has been at the forefront of international negotiations to find a new tax framework to cope with digital firms that can shift sales and profits between jurisdictions. But Mr Hammond said talks had stalled and that the UK was prepared to “go it alone”. In a submission to Mr Hammond, seen by The Times, TechUK, which represents many large multinational firms with a presence in Britain, claimed such a unilateral move would result in firms pulling out of research and development investment in the UK, damaging post-Brexit “global Britain” ambitions.

    “Investment by multinational tech companies into the UK is already at risk due to the huge uncertainties over Brexit,” said Julian David, the group’s chief executive. “For the UK to go it alone on creating a new tax targeted at digital companies in the budget would be the worst possible message at the worst possible time. Far from showing the UK is open for business it would create huge new barriers to investment and risk destabilising international efforts to reform the global tax system.” Describing the plan as a “smash and grab raid on revenue that will set alarms ringing from Washington to Tokyo,” Mr David said it could result in retaliation from the Trump administration. “There is a real risk that the government could start its post-Brexit ‘global Britain’ agenda with a raft of retaliatory tariffs from Donald Trump,” he said.
    Writing in The Times today, Bruno Le Maire, the French economy minister, says that more than 20 EU states support a 3 per cent tax on the turnover of digital giants. He says tech companies have “taken advantage” of an inability to update tax rules that are “still stuck in the 20th century” and calculated “mainly on the basis of the physical location of production facilities”.

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