UK imposes new tech tax on web giants despite US threats on car industry tariffs

A new tech tax has been unveiled, putting the UK on a collision course with America.

The Government confirmed a new 2% levy would start from April 1 for search engines and ­social media giants including Facebook, Google and Twitter. The move was announced yesterday, despite US threats of tariffs against the UK’s car industry.

Web firms with revenues larger than £500million, from which more than £25m is generated by British users, will be clobbered under the new digital services tax.

It is expected to rake in an extra £65m this year. And HM Revenue and Customs believes it could net up to £515m by 2025.

Apple, Google, Cisco, Facebook and Microsoft, who have been slammed previously for paying little tax, raked in a combined £8.1bn profit, according to think-tank Tax Watch UK.

But it claimed they use “complex financial structures to take profits offshore”, paying a “fraction of the corporation tax”.

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US treasury secretary Steven Mnuchin had warned the US could hit back with tariffs on UK-made cars as a result of the new digital tax on US firms.

Speaking at the World Economic Forum in January, he said President Donald Trump would raise the issue personally with PM Boris Johnson.

It comes after Facebook chief Mark Zuckerberg voiced support for tax changes, admitting he understood the “frustration” and accepted it may mean his company will have to pay more tax.

The Organisation for Economic Co-operation and Development had urged the UK government to hold off its plans.

The government said it is “committed to dis-applying the digital services tax once an appropriate international solution is in place”.

France has introduced tougher laws, demanding 3% of annual revenues from companies making more than €750m (£655m) in sales globally.

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