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Netflix to start declaring £1bn-plus UK revenues

The Netflix logo is pictured on a television
Since launching in Britain in 2012, Netflix has been moving the revenues it makes from its UK subscribers each year to accounts at its European headquarters in the Netherlands. Photo: Reuters/Mike Blake

Streaming giant Netflix (NFLX) is to start declaring its £1bn-plus ($1.33bn) UK revenues to HMRC, putting pressure on the likes of Amazon (AMZN), Google (GOOG) and other tech titans to do the same, it has been revealed.

Since launching in Britain in 2012, Netflix has been moving the revenues it makes from its UK subscribers each year to accounts at its European headquarters in the Netherlands. According to the Guardian, the company now plans to notify its almost 13 million UK subscribers about the change on Tuesday.

The revenue declaration will start from January 2021, the newspaper said.

The move will add pressure to other major tech firms who have been scrutinised for channelling revenues, and profits, to tax havens.

A company spokesman told the Guardian: “As Netflix continues to grow in the UK and in other international markets we want our corporate structure to reflect this footprint. So from next year, revenue generated in the UK will be recognised in the UK, and we will pay corporate income tax accordingly.”

Netflix has more than doubled its UK revenue from £500m in 2017 to around £1.14bn this year. It is estimated to hit 14 million subscribers next year, generating £1.3bn in revenues, according to analytics firm Ampere Analysis.

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The news comes as governments have been under an increasing amount of public pressure to clamp down on tax avoidance strategies over the last few years.

US tech giants may be forced to pay more tax in Europe and developing countries as the world’s rich nations are drafting a new global standard for taxing multinational firms, including paying corporate taxes on profits where firms operate.

The move would revolutionise corporation tax, allowing authorities to collect up to 4% more tax.

Last month the Organisation for Economic Co-operation and Development (OECD) said that the new system is ready to be implemented if political agreement can be reached next year.

The Paris-based organisation warned that failure to pass reforms was likely to result in trade wars that would cost 1% of global national income.

The current blueprint is made up of two main pillars to stop conglomerates shifting profits to low tax jurisdictions.

The first is that an element of global profits will be allocated to the countries in which customers are based, even if they sell remotely, instead of corporation tax being based on the physical location of the company.

The second is to have a minimum corporate tax rate, potentially of 12.5%, regardless of where they were headquartered. This means that if a company was based in a place with low corporate rates, other countries would have the right to collect taxes up to the global minimum.

The OECD said that the pandemic hindered progress on implementing a levy this year, even though “the Covid-19 pandemic makes the need for a solution even more compelling.”

Failure to reach a global agreement may prompt some countries to go it alone on digital taxation, further stoking global trade tensions.

Several European countries including France and Britain have already announced their own levies in the absence of a global accord.

Yahoo Finance has reached out to Netflix for comment.

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