March 2, 2020 / 12:13 PM / in a month

UK to consider opposition to digital tax in pursuit of U.S. trade deal

LONDON (Reuters) - Britain said on Monday it would consider opposition to its plan to impose a new digital tax on big tech companies like Google, Facebook and Amazon as part of its ambition to agree a free trade deal with the United States.

A 2% levy on the money major tech firms make from British users had been expected to be introduced next month.

It has been strongly opposed by Washington, however, which has said any such tax would be discriminatory and inappropriate.

“We note comments regarding digital taxation and will consider this as part of our policy development,” the British government said in its mandate for trade talks with the United States.

In January, U.S. Treasury Secretary Steven Mnuchin said the United States would retaliate against any unilateral move to tax the world’s biggest technology firms.

“If people want to just arbitrarily put taxes on our digital companies, we’ll consider arbitrarily putting taxes on car companies,” he said.

Britain said at the time that it would not back down.

“It’s a proportionate tax and it’s deliberately designed as a temporary tax, so it will fall away once there is an international solution,” said Sajid Javid, who was finance minister at the time but subsequently resigned.

Britain has said it wants a global solution to the issue of taxing digital firms, and it is engaged in international discussions to find one.

The Organisation for Economic Cooperation and Development (OECD) is working to develop international rules to make digital companies pay tax where they do business, rather than where they register subsidiaries. It wants to agree on the technical details of such a tax by July.

France had considered a similar digital tax, but it agreed in January to suspend down payments after Washington threatened to retaliate with tariffs on French wine.

Britain is likely to provide more details on its proposal when Javid’s replacement, Rishi Sunak, presents his budget on March 11.

Reporting by Paul Sandle; editing by Kate Holton

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