The United States and the United Kingdom are currently between a row relating to the British government plans to push through with its plans to impose a digital tax, affecting American tech companies, in April. Neither of the two superpowers yields on negotiations and continuous threats.
According to the newly introduced policy, a 2% tax shall be imposed on tech companies like Google, Apple, and Facebook for the profit they make from search engines, social media platforms, and online marketplaces serving people in Britain.
Because of this plan, the United States has made several threats to countries that plan to impose a digital tax, which could potentially affect many American tech companies. Speaking at the World Economic in Davos, Switzerland, U.S. Treasury Secretary Steven Mnuchin said that those who planned to levy the digital tax are at risk of being imposed with tariffs from the United States.
“If people want to just arbitrarily put taxes on our digital companies, we will consider arbitrarily putting taxes on car companies,” said Mnuchin, as U.K. Finance Minister Sajid Javid sat next to him.
However, the U.K. argues that there is an imbalance between the taxation of digital services offered by tech companies and the profits they get out of the people of the United Kingdom.
“We plan to go ahead with our digital services tax in April. It is a proportionate tax, and a tax that is deliberately designed as a temporary tax,” Javid said before adding, “It will fall away when there is an international agreement.”
Aside from the United Kingdom, France was also targeted by Washington over its plans to impose a 3% tax on digital services. Back in August last year, France has voted to impose a 3% tax on tech companies who earn through digital operations that would impact big American tech giants like Facebook, Amazon, and Google. The tax applies to organizations with annual revenues of more than 750 million euros ($830 million) arising from “digital activities,” including 25 million euros ($27 million) made in France.