UK Treasury Has No Plans To Suspend Digital Tax Amid Virus

The United Kingdom's government has no plans to suspend a digital services tax to help mitigate the economic impact of COVID-19, a U.K. government official told Law360 Tuesday.

The statement came as TechUK, a lobbying group that represents tech companies such as Facebook, Google, Apple and Amazon, has drawn sharp criticism from civil society groups and a leading right-wing newspaper for asking that the government suspend the country's digital services tax amid the coronavirus crisis. An official from HM Treasury, speaking anonymously per convention, denied there were plans to suspend the DST, even temporarily.

Tax Watch UK and the Tax Justice Network, which both campaign for more equitable taxation of large companies and against what they describe as tax evasion, have criticized TechUK's request that the digital services tax be delayed for a year to "give companies breathing space," as the lobbying group put it, during the economic fallout of the pandemic.

Robert Palmer, chief of Tax Justice UK, said the request was "completely shameless of the tech companies, even by their low standards."

Digital services taxes "are a small step towards leveling the playing field, and even at the best of the times would not come close to putting the tech firms in line with high street stores," Palmer told Law360.

Tax Watch UK rebutted claims by TechUK that the legislation had been made more complex before coming into effect April 1. Independent experts have dismissed that claim, Tax Watch UK said. 

"Given that large tech companies are set to do relatively well out of the crisis, perhaps now is not the time for them to be looking for a handout," the group said in a statement.

The two civil society groups were joined in their criticism from an unlikely source. The Times, a historically pro-business newspaper widely consumed in the halls of power, ran an op-ed Tuesday criticizing the tech industry for what it called a "distasteful" attempt to exploit the pandemic.

Margaret Hodge, a Labour member of Parliament and previous chairwoman of Parliament's Public Accounts Committee, said on social media it was "utterly obscene that Big Tech is lobbying to delay the new digital services tax."

Tech is "one of the few sectors doing well during the lockdown," Hodge said. "It's simply appalling that they would exploit a global health crisis."

TechUK denied lobbying the government directly to delay the introduction of the DST. The group remains concerned about "the lack of clarity" in the tax, according to spokesperson Harri Turnbull.

"TechUK continues to work with government to ensure businesses have the clarity they need, particularly against the backdrop of huge economic disruption and uncertainty," Turnbull told Law360, adding that the group continues to back a global solution to the taxation of digital companies.

Facebook, Apple, Google and Amazon were asked to comment but didn't immediately respond.

--Additional reporting by Todd Buell. Editing by Vincent Sherry. 

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