Hammond: UK Might “Go it Alone” on Digital Services Tax

by Startacus Admin

A couple of weeks ago, UK Chancellor Philip Hammond chose his Conservative Party Conference speech to suggest that he wouldn’t wait for an international consensus on digital services taxation. Bradley Post, Managing Director of RIFT Tax Refunds, shared all on what this might mean...
It was a surprising statement for many, but the dust it’s kicking up has been all-too predictable. Arguing that “global internet giants” like Facebook and Amazon must contribute fairly to UK public services, Chancellor Philip Hammond chose his Conservative Party Conference speech to suggest that he wouldn’t wait for an international consensus on digital services taxation.
What did he actually say?
First off, this wasn’t any kind of specific announcement. It was more of a general statement of position. If an international agreement on taxing tech giants can’t be reached any time soon, the UK is willing to do it unilaterally. The speech did hint that the Treasury might start playing as tough as it’s talking in the upcoming Budget, so more specific details could be on the way soon.
What’s the background to this?
Basically, there’s a feeling in some circles that huge tech firms like Amazon have been getting away with fiscal murder. Amazon’s UK division coughed up about £4.6 million in the last tax year on profits edging toward £2 billion. The year before, Facebook raked in £842.4 million, but paid out only £5.1 million in tax.
What’s the up-side?
Well, for one thing, tech giants have a way of running rough-shod over their competition. There’d probably be some celebration in the brick-and-mortar retail sector if Amazon had to bite a slightly larger calibre tax bullet. Without a lot of physical premises to pay business rates on, online giants arguably aren’t pitching in fairly toward public services. Business is changing, and tax law is struggling to stay relevant. Aggressive tax avoidance has become the name of the game for some of its biggest players.
What’s the down-side?
The tough thing about sledgehammer swings on tax is that they crack a lot of unintended nuts when they land. While Mr. Hammond makes it clear he’s got Big Business firmly in his crosshairs, it’s very often the smaller enterprises that end up taking the bullet. SME tech firms survive on innovation – but that very dynamism and agility can be stifled in a heartbeat by a heavy-handed tax or regulation framework. With an uncertain Brexit still to look forward to, innovation needs to be rewarded and invested in, rather than choked off.
Is it time to press the panic button?
No, it’s time to take a breath and look at what we actually know. Mr. Hammond is still carefully talking up the better option of a full international agreement on any digital services tax. One major roadblock there seems to be the United States’ argument that digital businesses shouldn’t be singled out unfairly. Since any new system would be targeting the giants, until we know more about where the lines are drawn it’s a little too early to fret about the impact on SMEs. It’s definitely worth paying attention, though. We’ve already seen with VAT MOSS that the needs of smaller firms aren’t always considered when new rules come in.
Subscribe to our newsletter
If you would like to receive our startup themed newsletter, full of the latest startup opportunities, events, news, stories, tips and advice, then sign up here.
Huckletree's new Web3 HQ aims to put London’s West End at the forefront of Britain’s tech superpower ambitions.

Kingussie High School scoops first place for Junior and Senior categories at this year’s Growing Future Assets Competition.

The lowdown on Manchester-based Arctic Shores and its innovative recruitment solution to help candidate potential count as much as skills and experience.

With the demand for tattoo removal now greater than ever, specialist NAAMA Studios makes a bid for a further £11m in funding.

By combining machine-learning with zero-party data, new tool launched by MarTech startup Qudo ends the ‘era of assumption’ for marketers.

Want to be your own boss and earn some money whilst travelling? Here are a few ways to do just that...

Innovative app marketing and analytics startup, App Radar becomes first platform to provide app marketers with Generative AI-powered insights into their own apps and competition.

Shropshire-based agri-robotics startup upp is automating broccoli harvesting and 'upcycling' the 80% waste into sustainable protein.

Alba secures licence to help transform banking for small and medium sized businesses in Scotland via its high-tech and customer-focused solution.

Making a few small changes in March could make all the difference for your business. Daniella Genas, founder of Be The Boss shares some tips on doing just that.
Published on: 12th October 2018
If you would like to enable commenting via your Startacus account, please enable Disqus functionality in your Account Settings.







- Huckletree opens new London hub for tech companies pioneering Web3 solutions 16th Mar 2023 Huckletree's new Web3 HQ aims to put London’s West End at the forefront of Britain’s tech superpower ambitions.
- Scottish Highlands Home to the Next Generation of Future Female Investors 15th Mar 2023 Kingussie High School scoops first place for Junior and Senior categories at this year’s Growing Future Assets Competition.
- London-based NAAMA Studios on a mission to raise £11m funding 14th Mar 2023 With the demand for tattoo removal now greater than ever, specialist NAAMA Studios makes a bid for a further £11m in funding.
- Qudo democratises data-powered marketing with new ‘freemium’ research and activation platform 14th Mar 2023 By combining machine-learning with zero-party data, new tool launched by MarTech startup Qudo ends the ‘era of assumption’ for marketers.