Rep. Kevin Brady R-Texas, chairman of the House Ways and Means Committee, on Wednesday blasted a new proposal by the United Kingdom to tax digital services.
“The United Kingdom’s introduction of a new tax targeting cross-border digital services – which mirrors a similar proposal under consideration in the European Union – is troubling,” said Brady in a release on Wednesday morning. “Singling out a key global industry dominated by American companies for taxation that is inconsistent with international norms is a blatant revenue grab.”
Earlier this week, the U.K.’s chancellor of the exchequer, their equivalent of Treasury secretary, proposed a 2 percent tax on sales made by digital companies like Google, Facebook, and Amazon in that country. The tax would take effect in 2020. The European Union has also proposed a sales tax for Internet-based companies of 3 percent, though that effort is thought to have stalled.
Taxing digital services has been a hot button issue in various countries, including the U.S., and the subject of efforts to develop an international framework toward taxing Internet-based companies.
“The ongoing global dialogue on the digital economy through the [Organization for Economic Co-operation and Development, an intergovernmental economic group] framework should not be pre-empted by unilateral actions that will result in double taxation,” said Brady. “If the United Kingdom or other countries proceed, that will prompt a review of our U.S. tax and regulatory approach to determine what actions are appropriate to ensure a level playing field in global markets.”
The U.S. Chamber of Commerce also weighed in on the topic this week, asking Treasury Secretary Steven Mnuchin to help block efforts by the U.K. and other countries to adopt their own digitally-focused sales taxes before countries agree on broad parameters for taxing those companies.
