British Chancellor George Osborne has announced a 25 percent tax on “profits generated by multinationals from economic activity here in the UK which they then artificially shift out of the country,” the BBC reports. The move is forecast to generate an extra £1 billion in tax revenue over the next five years, on top of £4 billion pulled in from cracking down on tax breaks for banks. Both predictions are disputed by the Office for Budget Responsibility, which suggests that the situation is too complex to pin down definite numbers.
The new tax could significantly impact tech companies such as Amazon, Apple, and Google, all of which use complex international tax strategies to avoid paying. In the UK, Apple’s three local subsidiaries paid no corporate taxes at all in 2012, despite reaping profits of £68 million, or about $103 million US. Next year Apple and other companies selling online apps and media will have to factor VAT (value-added tax) into prices, the result of the British government closing a loophole.
