London Daily

Focus on the big picture.
Friday, Oct 23, 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
Government Injects One Hundred and Forty Million Pounds to Expand Urgent Care Ahead of Winter Crisis
Department of Health Warns Further Pay Rises Will Derail National Health Service Waiting List Targets
Major Environmental Emergency Declared in South Wales Following Aerospace Kerosene Spill
Tank Barrel Production Returns to Britain as Defence Contractors Accelerate Domestic Rearmament
Government Approves Controversial Jackdaw Gasfield Development in the North Sea
National Health Service Maternity Safety Review Condemned Over Flawed Artificial Intelligence Integration
Dozens of United Kingdom Government Services Taken Offline Amid Critical Software Vulnerability
Barclays Announces Five Thousand Job Cuts Citing Artificial Intelligence Productivity Gains
Treasury Relaxes Post-Financial Crisis Accountability Rules for City of London Executives
United Kingdom Government Issues Unprecedented Guidance Urging Citizens to Stockpile Essential Supplies
United Kingdom Consumer Inflation Accelerates to Eleven-Month High Driven by Transport Costs
United Kingdom Public Sector Net Debt Breaches Three Trillion Pounds Ahead of Autumn Budget
Department for Science, Innovation and Technology Commits Fifty Million Pounds to Establish Regional Artificial Intelligence Innovation Clusters
Ofgem Directs Major Energy Suppliers to Expand Vulnerable Household Support Funds Ahead of Winter Heating Season
Home Office and National Police Chiefs Council Unveil New Intelligence-Led Strategy to Tackle Organised Immigration Crime Networks
First Minister John Swinney Secures Scottish Parliament Approval for Comprehensive Climate and Green Energy Infrastructure Strategy
National Health Service England and Trades Union Congress Finalize Agreement on Emergency Winter Staffing and Pay Frameworks
HM Treasury and Department for Business and Trade Announce Multi-Billion-Pound Sovereign Investment Pact to Spur Regional Advanced Manufacturing
Bank of England Governor Andrew Bailey Signals Potential for Faster Interest Rate Cuts as Domestic Inflation Pressures Ease Below Forecasts
Parliamentary Inquiry Highlights Urgent Need to Address Housing Shortage as Scottish Completions Hit Eleven-Year Low
United Kingdom and Singapore Sign Comprehensive Financial Agreement to Deepen Digital and Sustainable Market Ties
Greggs Announces Plan to Close Four Manufacturing Facilities and Cut Seven Hundred and Forty Jobs
International Monetary Fund Raises United Kingdom Economic Growth Forecast While Warning of Inflationary Pressures
Energy Security and Net Zero Committee Urges Government to Shift Policy Costs Onto Gas to Lower Household Bills
Housebuilding Across Scotland Plummets to Eleven-Year Low Despite Government Pledges to Tackle National Housing Emergency
Greggs Announces Factory Closures Across Northern England and Scotland Affecting Seven Hundred Forty Jobs
United Kingdom and Singapore Conclude Eleventh Financial Dialogue in Singapore to Deepen Cooperation on Digital Finance and Capital Markets
Energy Security and Net Zero Committee Urges Government to Shift Policy Costs to Gas Bills and Tap Windfall Profits to Lower Consumer Prices
British Broadcasting Corporation Announces Major Cost-Cutting Overhaul to Close Linear Broadcast Services for Television Channels BBC Three and BBC Scotland Alongside Digital Radio Station BBC Radio Four Extra
London Capital Markets Face Renewed Scrutiny After High-Profile Offerings Underperform Post-Listing
Green Party Wins Historic First Westminster Parliamentary By-Election in Gorton and Denton
Environment Secretary Emma Reynolds Unveils Sweeping Regulatory Overhaul for English Water Industry
United Kingdom Health Security Agency Confirms Thirty-Four Cases in Kent Meningitis Outbreak
Ministry of Defence Prepares Heat Pump Subsidy Cuts to Fund Urgent Military Modernization
British and European Union Officials Schedule Long-Awaited Bilateral Leaders Summit for November Twentieth
Bank of England Governor Andrew Bailey Urges Strict Fiscal Credibility to Protect British Bond Markets
United Kingdom Inflation Rises to Three Point One Percent Driven by Escalating Fuel Costs
Profit Warnings Among London-Listed Companies Reach Two-Year High Amid Global Energy Shocks
Chancellor John Healey Signals Targeted Tax Changes on Banks and London Corporate Offices Ahead of Budget
British Government Reallocates Twenty-Five Per Cent of International Climate Finance to Global Biodiversity Projects
Initial British Carbon Border Taxes Set to Undercut Parallel European Union Tariffs on Industrial Imports
Whitehall Prepares National Zero-Interest Loan Initiative to Accelerate Domestic Heat Pump and Solar Adoption
European Union Offers British Automakers Access to Hybrid Vehicle Trade Protections Subject to Strict Regulatory Alignment
British Probation Officers Threaten Widespread Industrial Action After Rejecting Five Per Cent Government Pay Offer
Microsoft Abandons Major British Artificial Intelligence Data Centre Citing Severe National Grid Power Constraints
United Kingdom Inflation Accelerates to Three Point Four Per Cent Ahead of Chancellor John Healey's Inaugural Autumn Budget
Surging Cloned Number Plates Severely Complicate Traffic Enforcement and Police Investigations
Mounting Opposition Challenges Planned Rollout of Autonomous Taxis Across London
Influential Think Tank Urges Rejoining European Union to Navigate Geopolitical Crises
Government Review Recommends Slashing Benefits to Fund Youth Employment Initiatives
×