CBI Autumn Budget submission highlights dangers of unilateral digital taxes

Digital and tech businesses are driving regional investment and innovation, with over 65% of tech capital invested in clusters outside London.  All businesses are increasingly digitalised and see the online marketplace as a critical element of their business growth strategy, including retail, services and the construction sector. As the way we work and do business changes, naturally questions arise around the way businesses are taxed. 

The CBI Autumn Budget submission highlighted the importance of the government continuing to work with OECD partners on a connected multilateral approach to taxing the digital economy, avoiding damaging UK competitiveness with a patchwork of unilateral measures. The submission highlighted that an important challenge for government is to not damage the UK’s competitiveness unnecessarily, and to keep a focus on digital to enable growth and prosperity across the economy.  

Businesses recognise that the digital revolution is not without its challenges and the tax system is one area that requires modernisation to ensure it remains fit for purpose. The UK should continue to work closely with the OECD and the EU to design and implement a system that addresses the issue while supporting digital adoption. But the UK should not be tempted to take unilateral action which would undermine that work. Instead, the government needs to continue to engage with business on the options on the table and further evaluate the impact on the UK economy.  

This discussion forms a key part of the CBI’s campaign activity to secure an international tax framework fit for our future.