Taxation of businesses in the digital economy

The international corporate tax rules must ensure that UK corporation tax payments are commensurate with the value digital companies generate from the domestic market and specifically the participation of users here.

A position paper published by the Treasury considers the challenges posed by the digital economy for the corporate tax system. Pending reform of the international framework the government will explore interim options to raise revenue from digital businesses that generate value from UK users such as a tax on revenues these businesses derive from the domestic market.

The Chartered Institute of Taxation welcomed the government’s statement in the paper that the UK remains committed to the principle of taxation where value is created.

Glyn Fullelove CIOT vice-president said: ‘Governments continue to struggle to reconcile the perception from their citizens that internet giants have a significant footprint in economies where they have a lot of sales...