Osborne announces new tax on UK-generated profits for multinationals

Osborne announces new tax on UK-generated profits for multinationals

Multinational companies like Amazon and Apple will pay a 25% tax on their UK-generated profits, Chancellor George Osborne announced today (3rd December).

Delivering the Autumn Statement in the House of Commons, Osborne specifically mentioned large companies “including in the tech sector” who would be penalised for “using elaborate structures to avoid paying taxes.”

Google, Apple and Starbucks are among the global companies which have been accused of the tax avoidance in the past, along with Amazon.

Osborne said the new tax profit would raise £1bn over the next five years.

He said: “We will make sure big multinational business pay their fair share. Some of the largest companies in the world, including those in the tech sector, use elaborate structures to avoid paying taxes. 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. That’s not fair to other British firms, it’s not fair to the British people either, today we’re putting a stop to it. My message is consistent and clear – low taxes that will be paid. Britain has led the world on this agenda and we do so again today.”

Last year, Amazon paid just £4.2m in corporation tax despite selling goods worth £4.3bn in the UK, causing calls from MP Margaret Hodge for people to boycott the company. Amazon is able to pay low tax because it claims payments to its UK website (and other websites in Europe) are taken from Amazon EU S.a.r.l, based in the low tax jurisdiction of Luxembourg.

Osborne also revealed that business rates rises would be capped at 2% today, at the same time as announcing a business rates review, which has been called for from trade bodies like the British Retail Consortium and the Booksellers Association for many years.

The business rates review was leaked before the Autumn Statement this morning, and is expected to be completed after the next election in 2016. Osborne said: “I urge business groups to engage with us on that.”

Osborne also said he was doubling the small business rate relief for the next year and that a £1,000 discount on business rates for small pubs, shops and cafes was increasing by 50% to £1,500 discount a year.