London Daily

Focus on the big picture.
Saturday, Aug 22, 2026

UK could drop plans to tax tech firms in rush to secure US trade deal

UK could drop plans to tax tech firms in rush to secure US trade deal

Trade experts raise doubts about digital sales tax aimed at companies such as Google
Boris Johnson’s plans for a multibillion-pound tax on tech companies such as Google and Facebook may be dropped in the post-Brexit rush to secure a trade deal with the US, trade experts have suggested.

The prime minister said internet companies needed to make a “fairer contribution”, as he indicated on Tuesday he would push ahead with a digital sales tax, despite opposition within his cabinet and a US backlash against similar plans from the French government.

There is a growing political consensus outside the US that the profit-shifting model is unsustainable. Labour included a pledge to tax large tech firms in its manifesto, while last year the Conservative party under Theresa May said it would introduce a digital services tax.

However, doubts have emerged about the government’s ability to raise taxes on one of the US’s largest export industries at the same time as securing a wide-scale trade deal with the US.

David Henig, the director of the UK trade policy project at the European Centre for International Political Economy thinktank, said one option could be that Britain trades a digital sales tax in return for the removal of tariffs on British goods. In October, the US imposed tariffs of 25% on UK products such as whisky, biscuits and Savile Row suits after a World Trade Organization ruling against Airbus.

Johnson has made it clear he perceives a trade deal with the US as one of the key opportunities of leaving the EU, potentially putting the UK in a weaker negotiating position, Henig said. “They’re bigger and we want preferential access so the UK will have to give way on some issues.”

Matthew Oxenford, the lead UK analyst at the Economist Intelligence Unit, said: “If the UK isn’t going to put agricultural standards on the table, NHS pharmaceutical procurement on the table, access for US tech firms on the table, they’re running out of things to negotiate.”

A digital sales tax would represent a major change in the way multinationals are taxed. Under one common arrangement used by US tech firms, they lower their profits artificially in countries where they earn large revenues – such as the UK – by paying licensing fees to sister companies in lower-tax jurisdictions such as Ireland or Luxembourg.

France’s tech tax would charge digital services firms that generate annual revenues of more than €750m (£635m) globally and more than €25m in France 3% of their revenues in the country, making it much harder to shift profits across borders. The US responded with a threat of tariffs as high as 100% on French goods worth $2.4bn (£1.8bn), including cheese and champagne.

The tech firms have long been preparing for an EU crackdown, with Facebook hiring the former deputy prime minister Nick Clegg as its head of global policy. However, a source with knowledge of the regulatory strategies of multiple tech firms echoed the view of the trade experts, saying the companies expected the digital sales tax would be dropped in US-UK trade negotiations. The companies are focusing instead on securing consistent rules across borders, which would make compliance less expensive, the source added.

The Information Technology Industry Council, a Washington-based tech lobby group, on Tuesday applauded the US government for defining France’s tax plans as discriminatory. It urged governments to focus on slower-moving but multilateral talks led by the Organisation for Economic Co-operation and Development.

Bernardine Adkins, the head of EU trade and competition at the law firm Gowling WLG, said the UK would find it difficult to agree a trade deal with the US if it retained all of its red lines, adding that a multilateral solution was more likely.

“You do need an international solution to avoid double taxation,” Adkins said. “They [the tech firms] would rather that it happens in an orderly, predictable fashion.”
Newsletter

Related Articles

0:00
0:00
Close
The rise and fall of Hui Ka Yan, China’s richest man
Woke: Britain Considers Plain Packaging for Cigars as Specialist Shops Warn of Industry Collapse
Britain's Public-Service Productivity Remains Below 2019 as £80 Billion Output Gap Fuels WFH Debate
Mandelson Epstein Case in Jeopardy as U.S. Files Stay Out of Reach
Prince Harry and Six Others Ordered to Pay £9.5 Million After High Court Defeat
Bank of England Holds Interest Rate at 3.75% as Inflation and Energy Risks Persist
UK AI Security Tests Find Autonomous Agent Attempting Malicious Code Injection
UK Economy Grows 0.4% in Second Quarter Amid Global Pressures
UK Joins European Allies in Condemning Israeli Settlement Plans in West Bank E1 Area
Multiple People Killed in A66 Collision Near Middlesbrough Involving Police Vehicle
UK Government Holds First National Day for Victims and Survivors of Terrorism
UK Met Office Warns of Severe Autumn Storms as Strong El Niño Follows Historic Drought
Petrol Bombs Set Luxury Cars Alight Outside Birmingham Wedding as Police Hunt Three Men
Bitcoin Surges Toward $80,000 as Short Squeeze and ETF Inflows Ignite Crypto Rally
Prince Harry and Co-Claimants Ordered to Pay £9.5 Million Toward Daily Mail Publisher’s Legal Costs
Prince Harry and Meghan Markle Reportedly Plan Return to Britain With Their Children
UK Court Ruling Threatens Deportation Plans for Potential Trafficking Victims to Albania
Kemi Badenoch Presses UK Government for Decisions on Rosebank and Jackdaw Oil Fields
UK Foreign Affairs Committee Chair Calls for Ban on Goods from Occupied West Bank
Andy Burnham Government to Place Civil Servants Directly in English Mayoral Offices
Met Office Warns Major El Niño Could Bring Stormier, Wetter Autumn to UK
UK Economy Gains Unexpected Momentum Ahead of Andy Burnham Government’s First Budget
Twenty-Nine US States Take Meta to Trial Over Alleged Child Addiction on Instagram and Facebook
Former Scottish National Party Executive Peter Murrell Jailed for Five Years Over £400,000 Embezzlement
Moderna and Merck's Personalized Cancer Vaccine Succeeds in Historic Late-Stage Melanoma Trial
Prince Harry and Meghan to Move Back to Britain With Their Children
England and Wales Have Fewer Than 1,800 Prison Places Left for Men
Royal Navy to Accelerate DragonFire Laser Deployment Against Growing Drone Threat
Northern Ireland Approves Five Hundred Million Pound Belfast Harbour Expansion
Great British Railways Takes Full Control of Avanti West Coast as Rail Nationalisation Reaches Final Stage
UK AI Safety Institute Calls for Mandatory Security Audits of Advanced AI Models
Scotland Secures Three Billion Pounds for Floating Offshore Wind Hub in Aberdeen
Government Overrides Local Councils to Approve Green Belt Housing Across Southern England
UK and EU Move Toward Mutual Recognition of Food Standards to Ease Cross-Channel Trade
Government Plans Multibillion-Pound Private Healthcare Expansion to Cut NHS Surgical Backlogs
Bank of England Signals Faster Rate Cuts as Inflation Falls Below the Two Percent Target
Suspected People Smuggler Arrested After Investigation Identified Him
Children's Doctors Warn That Vaping Can Lead Young People to Smoking
Hundreds of Thousands of Students Receive GCSE and Vocational Results Across England, Wales and Northern Ireland
Here Is What Can Never Happen in Your Country: Taiwan Is Giving Money to All Its People Because It Collected Too Much Tax
UK Inflation Rises to 2.9% as Energy Bills Jump
UK Issues New Conduct Guide for Asylum Seekers on Consent and Respect
Moderna Shares Surge After Positive Personalized Skin Cancer Trial Results
UK Markets Watch US National Debt Surpass Forty Trillion Dollars
UK Broadcasters Urge Government to Invest in Digital Participation and Broadband
CVC Capital Partners and Standard Life Launch Two Billion Pound Pension Risk Transfer Venture
UK Private Sector Productivity Growth Accelerates in Second Quarter
UK Foreign Secretary Ed Miliband Condemns Israeli E1 Settlement Tender
UK Watchdog Investigates Trainline, Virgin Atlantic and RED Driving School Over Hidden Fees
Prince Harry and Meghan Markle Plan Move to Private Home Outside London
×