I want to thank all those constituents who have written to me about the Digital Services Tax, or the so-called "Amazon Tax". I understand the concerns raised and completely agree that digital companies must contribute fairly to funding our vital public services and whilst, as I'm sure you will appreciate, I cannot comment on an individual company's tax liabilities, any company that is not paying its fair share of tax, as many of the big digital companies, such as Amazon, Google and Facebook, have been accused of, then the government should take an active an positive role in bringing them to heel.
A competitive economy is predicated on one key principle, the equality of opportunity, by which I mean everyone has the same opportunity to do something, even if they do not have the same chance of achieving; this ensure that we have an economic system that tilts toward rewarding hard work, endeavour and innovation, over cronyism and “old boys’ clubs”. This is key when considering the matters of tax because at the moment it feels like these big digital firms are playing a different game with different rules whilst smaller, less mobile companies do not have the opportunity to avoid tax in the same way, such as having their contracts signed out of Ireland despite the fact their sales are made in the UK.
These big digital firms do not exist in some cloud hovering above Silicon Valley completely abstract to the rules governing the countries they sell into and make money from. I am a supporter of innovation and am excited about the technology these companies are developing and the huge potential it has to completely revolutionise our lives, whether that is in travel, medicine, healthcare or engineering.
However these companies do not exist outside of the law or the jurisdictions in which they operate. When these firms operate in the UK they are benefiting from the services and infrastructure delivered and maintained by the taxpayers of the UK, such as our schools that provide good employees, are hospitals that keep them healthy, our roads that provide a means for moving mobilising their services and goods. We need to level the playing field on this important issue, which is why I am pleased to see the Government announce
The way in which businesses work is changing, which is why I am encouraged that the Government is reviewing the taxation of digital companies, to make sure all businesses pay their fair share. The UK is leading international efforts to reform the international rules around where profit is made and where it should be taxed. Pending this global reform the Government is exploring potential interim measures.
At the Autumn Budget 2018, the Chancellor announced that a UK Digital Services Tax will be introduced, targeting tax on UK-generated revenues of specific digital platform business models. This new 2 per cent tax will come into effect from April 2020, paid only by profitable companies which generate at least £500 million a year in revenue, and is expected to raise over £400 million a year for funding public services. Should a globally agreed solution present itself in the meantime, the Government will consider adopting this in place of the UK Digital Services Tax.
I appreciate there is more work to be done, but our country has made great strides towards ensuring businesses pay their fair share and will continue to lead international efforts to reform the international rules.
In addition the Home Affairs Select Committee, which I sit on, has called the big social media companies into Parliament for questioning a number of times and we have held them to account for their part in the proliferation of hate crime and the important role they can play in ensuring hate speech and incitement to violence is tackled online. You can watch our latest evidence sessions here.