I appreciate the concerns I have received from constituents recently about online retailers paying tax and agree that it is vital they contribute fairly to funding our public services.
Whilst I cannot comment on the tax situation of individual companies, the Government acknowledges the way that businesses work is changing. It is reviewing the wider taxation of the digital economy to make sure that all businesses pay their fair share, and 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, such as a tax on the revenue of certain digital businesses. This would be targeted at businesses which derive significant value from users, such as social media platforms and search engines. The Chancellor has been clear that if we cannot reach an international agreement over taxation, we will go ahead on our own with a Digital Services Tax. At Conservative Party Conference he said:
The best way to tax international companies is through international agreements……but the time for talking is coming to an end and the stalling has to stop. If we cannot reach agreement the UK will go it alone with a ‘Digital Services Tax’ of its own.
We have made great strides towards ensuring businesses pay their fair share of tax through tough new rules to crack down on multinationals shifting their profits to lower tax jurisdictions. Through the Diverted Profits Tax, around £8 billion has been returned and we will continue to lead global efforts to reform the international rules.