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The United Kingdom is working on options to mitigate the impact of its digital service tax on American technology companies to help secure a tariff deal with the White House, as the Trump administration played Hardball on the matter.
The British government is open to a variety of opportunities, including changes in flat 2 percent of the tax, and its features, said people informed the discussions between the United Kingdom and the SH.BA
The tax can continue to earn a significant income for the treasure even if some of its characteristics changed, people added.
Such changes may include excluding some tax sectors, increasing tax -free allowance of over £ 25m, or tax on income than income.
Companies that run online market, search engines and social media companies are subject to all taxes at the moment, whether they earn the UK profits.
Hard talks are underway with US President Donald Trump’s team to see if Britain can avoid US -global punitive fees, determined to be announced on April 2.
Sir Keir Starmer, the Prime Minister of the United Kingdom and Trump spoke on Sunday at night to discuss “progress” in the negotiations of economic trade agreements, Downing Street said on Monday.
Jonathan Reynolds, Secretary of Business and Trade in the United Kingdom, was told about a visit to Washington last week that Britain should change its tax regime to earn any engraving from the US mutual tariffs.
“When the UK team arrived in Washington, they said,” Let’s talk about an economic agreement that includes closer cooperation in technology and that, “said one person informed about the talks. “The US side said it had no interest in them and asked to know what the United Kingdom could offer in terms of tax.”
British government officials confirmed that tax changes were the main US demand. The Department of Business and Trade did not immediately respond to a comment request.
Trump has claimed that the added value tax imposed by European countries, including the United Kingdom, as well as digital services taxes are discriminatory against US companies.
Britain’s VAT regime is unlikely to be torn after raising a mass of £ 169bn last year for the blocked treasure with money. In contrast, the digital service tax is expected to collect about £ 800m in 2024-25.
Flat rate 2 percent of the tax, which strikes technology giants including alphabet, Meta and Amazon, has been applied to companies with global income greater than £ 500m, and is applied to over £ 25m derived from the UK.
Chancellor Rachel Reeves defended the tax principle on Monday. “The digital service tax is extremely important,” she said. “It brings about £ 800m a year and ensures that companies pay tax in the country they are operating.”
Reeves suggested that it would not be completely removed, adding: “We will continue to make sure that businesses pay their right tax, including businesses in the digital sector.”
Dan Neidle, a tax expert, said he believed the tax should be repealed because he was “interpreter” and did not collect much money.
“The argument that it is discriminatory is a real type,” he said, pointing out that the tax targeted only one sector where the US had special strength globally.
He added that the US saw the tax as discriminatory because it applied to income rather than profits. “You can be (Carmaker) BMW or (House of Champagne) Laurent-Berrier and you do not undergo a tax on your income,” he said. “But if you are an online company, you are.”
