The Chancellor of the Exchequer is concerned these mega-corporations are able to sidestep taxation in many nations whilst still utilising the benefits of income tax. The web giants, such as Facebook, Amazon, and Google, use tax-derived infrastructure, such as roads, power, and education, but do not contribute a fair amount in return. In response to the efforts of big-tech firms to side-step paying higher tax, the Joe Biden administration has proposed a global minimum corporation tax rate.
The US wants to see corporations globally pay 15 percent in corporation tax annually – well below G7 levels.
But the UK Government is concerned the Biden administration’s plans do not go far enough on taxation of tech giants.
Speaking about the need for G7 nations to tackle the “unfair” taxation, Mr Sunak told the Mail on Sunday: “We need them to understand why fair taxation of tech companies is important to us.”
The UK Chancellor of the Exchequer said the issue of tax on big tech firms must be looked at when the G7 meeting in the UK on June 4-5.
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He added: “Fundamentally, the global tax system isn’t working.
“Large multinational companies, particularly digital companies, are able by the nature of their businesses not to pay the right tax in the right places.
“And that’s not fair.
“That’s what we’re fighting hard to fix in these negotiations.
“If everyone works hard over the next few days and weeks, I’m confident that we can find a good place.”
The Daily Mail has reported large tech corporations, such as Facebook are even lobbying the UK Government to see to it that they pay a minimum amount of tax for doing business within the nation.
It has been suggested Facebook communications head and former deputy Prime Minister, Sir Nicholas Clegg, has been lobbying the UK Government against implementing measures that would see his new employer pay increased tax.
In August 2020, Mr Sunak decided to drop a planned “Facebook tax” on big-tech companies operating within the UK.
The increased taxation would have netted the exchequer an estimated £500 million per year.
However, Mr Sunak reportedly stated the Digital Services Tax was “more trouble than it is worth”.
It was also thought this taxation on large US companies would be an impediment to Liz Truss’s trade talks with the US.
One source close to the Exchequer at the time told The Mail on Sunday: “At just half a billion quid, Rishi has concluded it is just more trouble than it is worth, given the anger of Trump and the Washington establishment.”
The tax system the Government proposed to implement was designed by former Chancellor Philip Hammond.
It was designed to see only 2 percent tax on sales from tax companies within the UK, to ensure these mega-corporations paid even some tac on operations within the UK.
The tax would have affected Google, Facebook, and Amazon.
US officials were privately putting pressure on the UK Government to scrap the proposed tax by suggesting it would be a stumbling block to a post-Brexit trade deal.
Referring to the possibility of the UK imposing a higher tax on big-tech firms a US treasury spokesperson said: “We’ve been clear it’s a temporary tax that will be removed once an appropriate global solution is in place.
“We continue to work with our international partners to reach that goal.”