Treasury denies reports it will drop digital tax

The Treasury has flatly denied reports it plans to nix a recently-introduced tax on tech companies, saying it “will be removed once an appropriate global solution is in place.”

A spokesperson told Yahoo Finance UK: “We continue to work with our international partners to reach that goal.”

Reports emerged this morning in the Mail on Sunday that a tax on companies such as Facebook (FB), Google (GOOG), and Amazon (AMZN) could jeopardise post-Brexit trade deals with the US.

The Mail on Sunday reported that Rishi Sunak believed the tax, worth £500m a year, was “more trouble than it is worth.”

The UK brought in the tax in April after slow progress in negotiations between nations over how a tax on tech companies would play out. Many of the large tech players are US companies.

If such a tax change were to take place, it would have to be included in the next government budget which is due in October.

Around this time last month, reports emerged that Rishi Sunak was risking conflict with the US by reigniting proposals to roll out a tax for online retailers.

Sunak has previously been in touch with US treasury secretary, Steven Mnuchin, with regards to upping taxes on big tech firms. Mnuchin has hinted at possible tariffs on the UK if it presses ahead with plans.

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Digital sales now represent nearly one-third of purchases, a proportion that could continue to rise amid sporadic coronavirus lockdowns, while shoppers form new habits.

Imposing a tax would attempt to level the playing field with bricks and mortar retailers and could go some way to balancing the books as coronavirus-related spending soars.