Britain plans to introduce a tax to target multinationals such as Google (GOOGL.O) and Amazon (AMZN.O) accused of using complex accounting schemes to cut their payments on earnings in the country.
Governments around the world are trying to overhaul international tax treaties to stop big corporates siphoning off profits into low-tax havens, but British finance minister George Osborne broke cover on Wednesday to announce his own changes next year.
Tax experts cautioned however that the move, in response to growing outrage over how little tax some big corporates pay, would be difficult to enforce unilaterally.
“We will make sure that big multinational businesses pay their fair share,” Osborne said in a half-yearly budget statement. The tax will be set at a rate of 25 percent.
“Some of the largest companies in the world, including those in the tech sector, use elaborate structures to avoid paying taxes,” he told parliament.
Companies including Google, coffee shop chain Starbucks (SBUX.O) and internet retailer Amazon have paid minimal corporate tax in Britain by shifting revenues to low-tax jurisdictions, for example by using a system of internal payments.
Osborne said he would introduce the tax on profits generated by multinationals “from economic activity here in the UK which they then artificially shift out of the country” in April 2015.
Details about how the tax will be levied will be published on Dec. 10.
Osborne said Britain was leading the world in taking such a step, and he predicted the new Diverted Profits Tax would raise more than 1 billion pounds ($1.6 billion) over the next five years. (PL)