Support for tax on digital businesses

By Emily Hawkins contact

- Last updated on GMT

Digital businesses: There has been trade support for a Government suggestion that firms like Amazon could face a new tax
Digital businesses: There has been trade support for a Government suggestion that firms like Amazon could face a new tax

Related tags: Tax, Hospitality, ukhospitality, Internet

Trade organisation UKHospitality has said it hopes the Government will follow through on its suggestion that it might introduce a tax on digital businesses.

Chancellor Philip Hammond hinted that online firms may soon face a tax in order to level the playing field with high-street businesses.

He told Sky News: "We want to ensure the high street remains resilient and that taxation is fair between businesses doing business the traditional way and those doing business online.

"That requires us to renegotiate international tax treaties, because many of the big online businesses are international companies.

“The European Union has been talking about a tax on online platform businesses based on value generated."

Online companies like Amazon have long been criticised for not paying enough tax despite receiving millions in Government contracts each year and enjoying a boom in profits.

Unfair system

UKHospitality chief executive Kate Nicholls said the Government should intervene to amend what is an unfair system.

She said: “The taxation system must evolve to keep pace with the impacts of the rapid rise in digital business so the Chancellor’s proposals are certainly welcome.

“High street businesses, particularly hospitality businesses, are facing an enormous tax inequality and the Government desperately needs to take proactive steps to address this to help support vital businesses in the heart of communities.

Business rates

Nicholls said hospitality businesses were especially disadvantaged in the current system.

“Hospitality businesses are at a particular disadvantage, paying 10% of all business rates despite only generating 3% of turnover.

“As it stands, the hospitality sector is overpaying business rates by £1.8bn per year.

“Revenues from taxing digital companies can be used to slash the burden on high-street properties hardest hit by business rates, while the Government reviews the tax system and implements one that is fit for the 21st century.

“UKHospitality has been pushing the Exchequer for tax reform and we will continue our dialogue to make the point that digital businesses need to pay their fair share.”

Related topics: Legislation

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