Many larger companies like Apple, Google, Amazon, Starbucks and many more generate m,massive profits in the UK each year, although they pay very little tax on these profits in the UK because of the way that they conduct their tax affairs, that is about to change with a new tax which has been described as the ‘Google Tax’.
The UK Government has announced a new 25 percent tax for companies that make large sums of money in the UK, but pay very little tax, many of these companies like Apple and Google divert these profits to Ireland, where they pay much lower taxes.
These companies are not actually doing anything illegal, and they are abiding by the current tax laws, the laws are about to change, and they will now have to pay tax in the UK on their UK earnings.
“Today I am introducing a 25% tax on profits generated by multinationals from economic activity here in the UK which they then artificially shift out of the country.”
The new tax laws will come into effect next April, and this new 25 percent tax rate is actually higher than the current UK corporation tax.
By setting the rate for diverting earnings out of the UK higher than the current tax rate, the government is obviously hoping that this will encourage companies to actually keep their profits in the UK, and pay the standard corporation tax rate.
It will be interesting to see how the new tax system works or whether these big companies will managed to come up with another way to avoid paying tax on their UK earnings.
Source The Verge
Filed Under: Technology News, Top News