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Google’s UK tax could jump seven-fold on plan for revenue levy

Tim Wallace
A 5pc tax on UK revenues could cost Google hundreds of millions of pounds per year in what is effectively an argument between governments over the correct place to levy taxes - © 2016 Bloomberg Finance LP

Tech giants could see their UK tax bills multiply by hundreds of millions of pounds a year if the Government follows French proposals to introduce a digital levy on revenues.

Google paid £36m in tax last year under current rules, with Facebook charged £5.1m. But if the Government follows through on proposals to tax revenues, not just profits, this could hit the companies far harder.

Google said it had UK revenues of $7.8bn in 2016, or £5.6bn, so a 5pc tax would take £280m – more than seven-times larger than its current bill. Facebook generated £1.8bn of UK revenue in 2016, according to eMarketer, which would result in a £90m charge, more than 17-times bigger.

The Treasury has not yet settled on a firm plan, and these ideas are still in the very early stages of development. Last week, France threatened to charge Silicon Valley’s big names 5pc of their turnover.

France led one proposal last year, alongside Germany, Italy and Spain, to introduce a levy, known as an “equalisation tax”, which could come in at between 2pc and 5pc.

Facebook could be hit too as social media companies, search engines and online marketplaces are all in the UK government's sights Credit: GIAN EHRENZELLER/EPA

A separate study from Dutch MEP Paul Tang estimated such a levy would have raised between €1.6bn and €4bn from the two firms from 2013 to 2015. The British Government is understood to be considering this among many other suggestions. Google and Facebook declined to comment.