There has been great debate recently as to how big corporations such as Google, Facebook, Amazon and companies alike should be taxed. Does the UK tax them on profits, revenue or perhaps taxing them on technology / the machinery they use?
Corporations such as Google and Facebook account for more than 54% of British digital advertising revenue. That’s over half of the TOTAL revenue from digital advertising from just two corporations.
The UK Treasury’s potential answer to this problem is by taxing revenue, not profit. This ‘solution’ completely excludes the political implications that this could bring. Its all and well suggesting ways to tackle down on massive corporations and taxing them more, but the reality is that nothing stops these giants from relocating. This would undoubtedly send out a negative message to the rest of the world about the way the UK treats massive global corporations.
Tax specialist Richard Murphy has suggested that the proposed move from the UK Treasury may not be entirely feasible. Instead, arguing that we should focus on imposing a minimum corporation tax level as an intermediary step towards unitary taxation. This is most likely the best solution as companies will actually be forced to pay tax on where they do business, not where they’re registered.
Perhaps taxing machinery and technology is another way?
Taxing machinery and other technological equipment could be a solution. At first glance this does not sound easy and undoubtedly it would take a long time to find a way to efficiently tax firms based on the automation they use. Perhaps companies such as Amazon who use thousands of robots in their warehouses should be taxed for the use of the robots, as they are a direct contributor to their profits?
In the case for corporations like Google and Facebook, a VAT style tax could be imposed, but one that cannot be claimed back by firms. This is somewhat possible but also widely sceptical as the politics is very complex and I personally do not see a Tory government introducing such measures, especially with Brexit only just around the corner. This may well just be an ongoing battle between the UK Treasury and extremely large corporations such as Google and Facebook in the years to come.
International Political Economy student & Cryptocurrency enthusiast.
Founder of OurEconomy.