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UK government outlines new 'Google Tax' to curb corporate tax avoidance

The UK government is clamping down on corporate tax avoiders, in a new ‘Google tax’ law forcing international companies to outline revenue and profits in each country, and pay 25 per cent corporate tax.

Chancellor George Osborne announced the Google tax last year, and it is finally coming into Parliament. It will be outlined in next week’s budget plans, alongside other moves by the Conservatives to tackle benefits.

Google tax is higher than the normal 20 per cent corporate tax, due to several technology companies avoiding the UK’s tax through loopholes in Ireland and Luxembourg.

Companies earning over £250 million in annual revenues will be subject to the new Google tax, including Apple, Amazon, Facebook and other US companies regularly reporting less earnings to the UK.

Apple might use this spike in corporate taxes as a way to price iDevices higher. Hopefully, this will not be the case, although Apple and Amazon have both levied higher prices for goods when the UK government changes corporate taxes before.

The National Foreign Trade Council - a lobby group representing the interests of 300 international companies - said it was unhappy with the Chancellor’s proposed tax, claiming it would hurt UK business.

George Osborne first proposed the Google tax in December (opens in new tab), claiming that “Some of the largest companies in the world, including those in the tech sector, use elaborate structures to avoid paying taxes.”

David has been a technology journalist for over six years, covering a wide range of sectors. He currently researches apps, app sectors and app markets for Business of Apps, and has written for ITProPortal, RTInsights, ReadWrite, and Digital Trends.