Shulou(Shulou.com)11/24 Report--

CTOnews.com, Nov. 24 (Xinhua) the British government said that the British Digital Services tax (DST) raised 360 million pounds (about 3.053 billion yuan) in its first year, 90 percent of which came from five technology giants, including Apple.

CTOnews.com has learned that DST levies a 2 per cent tax on total income earned in the UK, in part to counter tax avoidance measures by Apple and other companies to channel UK profits to low-tax areas such as Ireland. Other companies that pay for DST include Amazon, Google and Facebook.

Background people have long complained that American technology giants pay too little tax in European countries. A common strategy adopted by companies such as Apple and Google is to set up an European headquarters in Ireland, where sales tax is much lower and announce that all sales profits in Europe are realized by the headquarters, rather than in individual countries such as the UK.

This means that they are largely evading corporate tax, which is based on profits rather than income.

This has, of course, led to a court battle between the EU and the Irish government, in which Ireland is accused of offering preferential taxes to companies such as Apple to attract them to the country. Under EU law, it is illegal for member states to offer preferential taxes to companies.

If Ireland loses the case, it will have to charge Apple $15.8 billion in underpaid taxes. In the end, however, Ireland won, which meant Apple didn't have to pay.

Britain's Digital Services tax (DST) some European countries have decided to solve at least part of the problem by imposing a tax on technology giants based on income generated in the country rather than declared profits. This means that no matter where these companies choose to transfer profits, they will have to pay at least some taxes in the countries where they earn profits.

France was the first country to announce a "technology tax" of 3 per cent of income, and Britain followed suit. The UK's DST will come into effect in 2020.

The reason for saying "part" is that DST, as the name implies, applies only to the sale of digital products, not physical products. In the case of Apple, this means that it pays only 2 per cent tax in the UK on income such as App Store and services such as iCloud, Apple Music and Apple TV +.

It is estimated that DST is expected to raise £275 million in its first year, but the Guardian reported that strong sales of apps and other forms of entertainment services actually raised £360 million during the outbreak.

Taxes expire in 2024 DST is a temporary tax measure that applies only to 2020-2023. From 2024, a global tax agreement is expected to come into force, which will ensure that all companies pay a fair share of taxes in each country in which they operate.

It has long been recognized that individual countries' taxation of foreign companies is unsustainable. Different tax rates will still cause tech giants to look around for countries with the lowest tax rates, while countries that impose taxes such as DST will face the risk of retaliating by imposing tariffs on their exports.

The only real solution is a global agreement on the tax treatment of companies in every market in which they operate, which means that all companies and countries will operate on a level playing field. As early as 2019, the Organization for Economic Cooperation and Development (OECD) announced plans for such an agreement.

Work on the agreement began in 2020, with 137 countries participating, and the new tax system is expected to be implemented in 2024.

Tim Cook, CEO of Apple, expressed support for the OECD plan. While this may increase the company's taxes, it will at least simplify things and eliminate a growing public relations problem.

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