Netflix may soon need to pay for the proposed digital services tax in the United Kingdom.
On Monday, the UK government announced that the streaming service giant together with other online platforms like Facebook, Google, Amazon, and Apple would soon have to bear with the new tax obligation.
With the dynamic and changing commercial models, the British government reckoned that the country needs to keep pace with these developments. Hence, it has decided to update its system.
Philip Hammond, the UK’s finance minister, expressed his disapproval of digital platform ventures gaining considerable revenues in his country.
Speaking at the Houses of Parliament, he announced that the digital services tax is created to make sure that technology behemoths will take the tax responsibility.
Hammond reckoned that it is unsustainable or fair that these large businesses are not paying taxes in his country.
Starting April 2020, Britain’s Treasury department informed that profitable firms would be taxed at two percent of the profits they make from British citizens.
This taxation strategy would help raise over 400 million pounds ($512 million) annually. Self-assessment by the online commercial establishments shall be the basis of the tax measure.
Among the targeted platforms are social media, online retailers, and search engines.
Hammond cited that the tax will be shouldered by firms that generate at least 500 million pounds ($640 million) annually in global revenue.
At this point, officials from Netflix have not made any comments yet about the proposed digital services taxation.
The British retail industry and smaller businesses are foreseen to welcome the new tax proposal.
These companies have been grappling because of the cutthroat competition with e-Commerce giants like Netflix which are currently riding high as multibillion-dollar firms.
Paul Martin who serves as the UK retail chief executive at KPMG pointed out that the UK’s digital services tax is the game changer the retail industry.
The British finance minister said that the country has been attempting to change its international corporate tax system.
However, he noted that progress has been sluggish and that the government could not merely keep discussing it.
In the meantime, the UK government would study the details of the digital tax services to ensure that it is on the right track.
It will see to it that the country keeps its position as among the ideal destinations to begin and grow a technology business.