Beautiful Virgin Islands

Tuesday, Jun 03, 2025

G7 plan will slash UK tax revenue from US tech firms, say experts

G7 plan will slash UK tax revenue from US tech firms, say experts

Global changes could mean Treasury loses £230m from Google, Amazon, Facebook and eBay
Experts have warned that US tech companies, including Google, Amazon and Facebook, could pay less tax in the UK and several other big economies under global reforms agreed at the weekend by the G7.

In a key stumbling block emerging days after the landmark deal, research from the TaxWatch campaign group indicates that the UK Treasury stands to lose about £230m from the taxes paid each year by four of the big US tech firms.

The study estimates that Facebook, Google, eBay, and Amazon, contribute about £330m between them to the UK’s digital services tax – a levy on internet search providers, online marketplaces and social media firms. The tax was launched last year as a stopgap measure until a global deal could be reached.

TaxWatch said the UK tax bills paid by these firms would fall to just over £100m under the G7 plan.

The campaign group calculated the sum by analysing the UK accounts of each company for 2019, the most recent year when data was available. Although precise details of the global tax changes are still being negotiated and limited information has been published so far, the group estimated tax liabilities based on details in the G7 communique published last weekend.

According to the research, Google is estimated to contribute £219m to the digital services tax but would pay just £60m to the UK exchequer under the G7 plan.

For Facebook the tax take would fall from £58m to £28m. For Amazon it would drop from £50m to £10m, and for eBay from £19m to £3.8m.

The figures are estimates because the Treasury does not publish a breakdown of the amount each firm contributes to its digital services tax.

A Treasury spokesperson said the final details of the rules still needed to be worked through, and that the impact on tax revenues would be assessed by the independent Office for Budget Responsibility.

“The historic global tax agreement backed by G7 finance ministers reforms the global tax system to make it fit for the global digital age, achieving a level playing field for all types of companies. The deal makes sure that the system is fair, so that the right companies pay the right tax in the right places,” he added.

Sources close to the talks said the UK and EU nations were continuing to push for more in tax to be raised within their borders by large US tech companies. It comes ahead of the next key moment for tax reforms, at a meeting of the G20 in Venice in July.

Chris Sanger, global government and risk tax leader at the accountancy firm EY, said: “The UK will not want to turn off the taxing of those global multinationals, under the digital services tax, until it feels it has another tax that can deliver equally or better. There is still a lot of detail to be worked through in this space.”

At the heart of the issue are the two “pillars” in the G7 deal: one enables countries to tax large company profits based on their sales in that market, and a second sets a minimum global corporation tax rate. The global minimum would be set at a rate of at least 15% and capture thousands of firms and be paid in their home countries.

Because so many multinationals have their headquarters in the US, other nations are demanding that the largest companies also pay tax in nations where they generate their revenues. So under pillar one, the UK should receive a portion of the tax generated in the country by Apple and Facebook.

A mechanism for redistributing the profits of the largest companies is under discussion. A list of 100 companies whose profits could be divvied up in this way was presented at the G7. The list remains confidential, though is understood to include tech companies, but not banks or extractive firms such as mining and oil groups.

The redistribution mechanism would apply to companies with “superprofits” – profit margins exceeding 10% of revenues.

Although experts believe pillar one redistribution would generate relatively little for the UK, the Treasury would still gain an estimated £7.9bn each year from the global minimum rate under pillar two. This is because the global minimum tax is paid to a firm’s home country, and the UK has several large multinationals on its shores that would be caught.

Analysts at the EU Tax Observatory have suggested firms such as BT, Barclays, HSBC and BP, could be caught up in the pillar two arrangement.

Sources close to the tax reforms, which are being negotiated between 139 countries at the Organisation for Economic Co-operation and Development (OECD), said the UK and EU finance ministries were pushing for tougher concessions from Washington to raise more in tax from large US companies outside their home jurisdiction.

The Biden administration has however focused minds by threatening to impose punitive tariffs on imports from the UK and five other countries in retaliation for digital services taxes recently imposed on US corporations.

Tax campaigners warned that lower-income countries, which do not have multinationals based on their shores to benefit from a global minimum tax, would not stand to gain much from the limited amount of tax to be raised from pillar one. This could become a key sticking point at wider G20 talks in Venice next month.

George Turner, director of TaxWatch, said: “It seems to me this is a good deal for the US, they get to tax their multinationals more, and they get to protect themselves from companies trying to [go] offshore by making it a global deal.

“The fact Facebook and Google end up paying less tax in the UK under this deal is controversial, I don’t think you can get away from that. It wasn’t the aim of the whole game.”
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
China Accuses US of Violating Trade Truce
Panama Port Owner Balances US-China Pressures
France Implements Nationwide Outdoor Smoking Ban to Protect Children
German Chancellor Merz Keeps Putin Guessing on Missile Strategy
Mandelson Criticizes UK's 'Fetish' for Abandoning EU Regulations
British Fishing Boat Owner Fined €30,000 by French Authorities
Dutch government falls as far-right leader Wilders quits coalition
Harvard Urges US to Unfreeze Funds for Public Health Research
Businessman Mauled by Lion at Luxury Namibian Lodge
Researchers Consider New Destinations Beyond the U.S.
53-Year-Old Doctor Claims Biological Age of 23
Trump Struggles to Secure Trade Deals With China and Europe
Russia to Return 6,000 Corpses Under Ukraine Prisoner Swap Deal
Microsoft Lays Off Hundreds More Amid Restructuring
Harvey Weinstein’s Publicist Embraces Notoriety
Macron and Meloni Seek Unity Despite Tensions
Trump Administration Accused of Obstructing Deportation Cases
Newark Mayor Sues Over Arrest at Immigration Facility
Center-Left Candidate Projected to Win South Korean Presidency
Trump’s Tariffs Predicted to Stall Global Economic Growth
South Korea’s President-Elect Expected to Take Softer Line on Trump and North Korea
Trump’s China Strategy Remains a Geopolitical Puzzle
Ukraine Executes Long-Range Drone Strikes on Russian Airbases
Conservative Karol Nawrocki wins Poland’s presidential election
Study Identifies Potential Radicalization Risk Among Over One Million Muslims in Germany
Good news: Annalena Baerbock Elected President of the UN General Assembly
Apple Appeals EU Law Over User Data Sharing Requirements
South Africa: "First Black Bank" Collapses after Being Looted by Owners
Poland will now withdraw from the EU migration pact after pro-Trump nationalist wins Election
"That's Disgusting, Don’t Say It Again": The Trump Joke That Made the President Boil
Trump Cancels NASA Nominee Over Democratic Donations
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OnlyFans for Sale: From Lockdown Lifeline to Eight-Billion-Dollar Empire
Mayor’s Security Officer Implicated | Shocking New Details Emerge in NYC Kidnapping Case
Hegseth Warns of Potential Chinese Military Action Against Taiwan
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Jamie Dimon Warns U.S. Bond Market Faces Pressure from Rising Debt
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Taylor Swift Gains Ownership of Her First Six Albums
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
×