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Is the UK government serious about its Digital Tax?

Earlier this week at Davos the chancellor, Sajid Javid, continued to insist that the UK’s proposed digital tax on the leading tech companies would be implemented, despite growing pressure from the US and the decision by the French government to postpone their own digital tax until December.

The US continues to argue that any digital tax is discriminatory against US companies and has warned that the UK would likely see a tax imposed on its car exports in retaliation, should the tax be imposed.

There’s been growing support for national digital taxes of late and UK and French moves to impose these kinds of taxes were seen as playing an important role in pushing an international agreement.

Margrethe Vestager, the EU competition commissioner, has thrown her weight behind the British government’s plans to press ahead with its digital tax and has called on the EU to revive its own plans, within a year, if international efforts to find a solution fail

The OECD has urged the UK to reconsider and, like France, postpone any implementation prior to a global agreement. It seems increasingly confident that the international community will soon find a way to reach an agreement on how to tax these companies - although we have been here before.

The UK government, however, remains adamant that the UK levy will happen, but could a delay now be the better option?

The big question really is how serious is the OECD and can it deliver on a global agreement, that the industry itself seems to want and would welcome? It’s been talking about such a tax deal for years and yet there’s still very little clarity as to how such a tax would be set or implemented.

Whatever the outcome, has the OECD given the UK a way out of what could prove a nasty trade spat with the US at a time when the UK is embarking on its post-Brexit journey?

Neil Tyler

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