Secure an international tax framework fit for the digital age

Secure an international tax framework fit for the digital age

Modernise the lumbering tax system of the past to work for the future

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.

The change we're calling for

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.

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    UK government should be a leading voice in agreeing a single international tax framework with the OECD and actively discourage siloed measures

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    To help rebuild public trust, government must focus the debate on modernising the framework in response to digitalisation – not tax avoidance

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    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

Why it’s needed

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 has implemented its own measure: the Digital Services Tax (DST). 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 considering proposals for international reform, the DST should 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.

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"Going it alone on a digital services tax is high risk, we have already seen this in the US reaction to the UK’s and others’ DSTs. 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"

Andrew Titchener, Head of Tax Policy

The case for a new international tax framework

Our new way of working is raising serious questions

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)

Our progress and wins

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.

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Support the change

  1. Are you a business leader?

    Join the CBI

    Our members are our mandate, and the reason we’re the most influential business organisation in the UK. Join the voice of business and help us campaign to secure an international tax framework fit for the digital age.

    Find out more
  2. Are you a CBI member?

    Have your say

    Join our working group and share the impact of these proposals on businesses operating in the UK.

    Get involved
  3. Are you a policymaker?

    Make a difference

    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.

    Contact us