Tax Rebate for Tech Giants: APPG Reaction

The APPG has broadly welcomed the Global Tax Settlement agreed by the OECD and the G20 which will set a global corporation tax floor and look to distribute the profits of the biggest digital multinationals in a more fair way in the countries in which they operate.

However, Friday’s announcement that some digital companies will be given a tax credit that can be used against these future changes seems to fly in the face of these good intentions. It seems barely conceivable that a policy designed to get the biggest corporations to pay more will actually see them getting a tax rebate from the rest of us!

This credit system will operate during a transition period until the newly agreed rules come into place by 2023. The agreement will mean that although existing digital service taxes will continue until the end of 2023, a company that has paid more tax in 2022 than they would if the new rules were in place can gain a credit against corporation tax for the excess.

This is another let off for the tech companies and comes alongside concerns that have already been raised as to whether the effect of the new agreement will even see tech companies pay more in the first place. Analysis from Taxwatch suggests that the new agreement could actually result in a tax cut for the multinational digital corporations who were supposed to be the target. 

 At a time when ordinary people are facing tax rises to deal with the social care crisis and when public services are under immense strain as we recover from the pandemic, giving global tech corporations an unnecessary tax rebate sends completely the wrong message.

Anna Turley, APPG Campaigns Manager