- Government must look to international solution to taxing the digital economy - Businesses are already struggling to get to grips with a complex tax environment
Commenting ahead of the Spring Statement on Tuesday 13 March 2018, Melissa Geiger, head of international tax at KPMG, said:
“On Tuesday, we are likely to see an update and some interim options presented on the back of the government’s position paper for taxing the digital economy. This enthusiasm to embrace solutions is encouraging but a short-term fix could significantly impact the UK’s ability to attract investment and risks seeding more confusion into a tax system already fraught with complexity. No matter how well intentioned those temporary fixes might be, the better answer is to tackle the digital economy in a collaborative way with international consensus.
“Tax authorities are frustrated by the inability to appropriately tax digital businesses and have a real appetite to secure revenues that adequately reflect how and where value arises. At the same time, we can’t forget that businesses are also still getting to grips with BEPS, struggling with complex UK reforms, such as losses and corporate interest restrictions, and responding to the impact of US tax reform.
“Now, with the UK at an economic crossroads as Brexit approaches, there is a strong case to hit the pause button on any significant changes or unilateral action to taxing the digital economy. First, we need to fully understand how any solutions might affect the UK’s competitiveness. Conclusions must be drawn and change must happen, but only with a solution that operates for the benefit of the wider economy.”
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