The economy is changing at an unprecedented pace: more and more businesses are becoming digital and working internationally. But firms are navigating a fragmented century old tax system that wasn’t designed to support this new way of doing business. This means unnecessary complexity, mismatched taxes in each country - resulting in profits being taxed more than once - and public scrutiny over whether they pay their fair share of tax.
That’s why we’re calling for the government to help redevelop an international tax framework that is unified, provides certainty and is transparent for businesses and people. And that means not developing a solution in a silo – the proposed UK Digital Services Tax – which would only add to the cost and complexity.
UK government should be a leading voice in agreeing a single international tax framework with the OECD and actively discourage siloed measures
To help rebuild public trust, government must focus the debate on modernising the framework in response to digitalisation – not tax avoidance
For the new framework to ensure that, no matter where they operate, businesses are subject to taxes which equate to only taxing their profits once
It’s a simple fact of our economy: every business is, or will soon be, digital. Digitalisation is changing the way we work and raises questions around how businesses should be taxed.
Though firms want to be transparent, complexity causes misunderstandings about how and where businesses pay tax. And there is no international consistency, even regarding what businesses should be taxed on.
The system needs global reform, but governments are being pressured to adopt uncoordinated measures in the interim. The UK is proposing its own measure: the Digital Services Tax (DST) in April 2020. But ringfencing digital businesses with a new revenue-based tax contradicts the government’s strategy to make the UK the best place for digital business. And going it alone increases the risk of firms being taxed more than once.
DST wallpapers over cracks that won’t go away. And, with the OECD currently generating proposals for international reform, the DST would soon be redundant. An international consensus must be reached which ensures that firms are subject to taxes which equate to only taxing their profits, not revenues, once. Reform is coming: now is the time for us to shape it.
"Going it alone on a digital services tax is high risk and any action taken by the government should be in step with global partners. Business adoption of new technologies should be encouraged not hampered. Any new approach must have international consensus and be based on evidence from firms from a wide range of sectors."Annie Gascoyne, Director of Economic Policy
Digitalisation is fundamentally changing the way businesses operate. Some business models are further along, but all are on the same journey. With this change comes questions about how businesses are taxed globally.
of respondents to a CBI business survey anticipated they would carry out activities that would be (or may be) within the scope of proposed UK digital services tax (DST)
the tech economy is creating jobs 2.8 times faster than the rest of the economy
of EU citizens believed that companies in general were not paying their fair share of taxes according to an EU-wide survey (2016)
The CBI campaigns tirelessly on behalf of our members so that business creates prosperity for all. Learn more about the work we do and the impact we are making on this issue.
HM Treasury attends the CBI Tax Committee
CBI responds to OECD on the tax challenges of the digitalised economy
CBI hold member roundtable on taxation of the digital economy
CBI inputs in Business Europe letter to the Vice President at the European Commission
CBI responds to EU Commission consultation on fair taxation of the digital economy
CBI responds to HM Treasury’s position paper on Corporate Tax and the Digital Economy
HM Treasury publishes an updated position paper on Corporation Tax and the Digital Economy
CBI responds to EC proposals on Fair Taxation of the Digital Economy
CBI Tax Committee meets with key EU officials to discuss digital taxation
CBI Autumn Budget submission highlights dangers of unilateral digital taxes
CBI gathers evidence on the introduction of a Digital Services Tax and how it would impact the economy
CBI responds to government consultation on introducing a UK Digital Services Tax
CBI responds to OECD consultation on tax challenges of economic digitalisation
HM Treasury attends CBI roundtable to hear member views on tax challenges of economic digitalisation
OECD attends CBI Tax Committee to discuss resolving tax challenges of the digitalisation of the economy
CBI’s Chief Economist highlights concerns with a Digital Services Tax
HMT attends CBI Tax Committee to hear member’s views on the “Unified Approach”
CBI establishes Digital Tax Working Group
New ‘unified approach’ to international tax proposed
CBI responds to OECD consultation on Secretariat Proposal for a “Unified Approach”
CBI highlights the need for centralised administration of the “Unified Approach” at OECD public consultation
CBI responds to OECD consultation for a Global Anti-Base Erosion Proposal
CBI welcomes commitment by OECD Inclusive Framework to explore ‘One Stop Shop’ concept
CBI Budget Submission calls for a halt to the UK Digital Services Tax
The CBI launches its Invest for Growth campaign to increase UK R&D spend to 3%, with its Now is the Time to Innovate – Road to 3% report
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This campaign is led by the CBI's Tax and Regulation team.
Contact Annie Gascoyne, Director of Economic Policy, to find out how the UK can secure a refreshed international tax framework and how you can support it.