The Trade Secretary has declined to rule out changing taxes on major tech firms in exchange for exemptions from US tariffs, but insisted they would pay “a fair amount of tax”.
Media reports have suggested the Government is considering changes to the digital services tax (DST) as it scrambles to head off the wide-ranging tariffs Donald Trump is expected to introduce as early as next week.
The tax imposes a 2% levy on tech firms, including US giants such as Amazon owned by supporters of Mr Trump, and brings in about £800 million a year.
Although on Wednesday the Chancellor said the Government’s view on the tax had not changed, Trade Secretary Jonathan Reynolds suggested on Thursday that ministers were willing to discuss the issue with their US counterparts.
Speaking at a trade conference hosted by Chatham House, Mr Reynolds said: “We have always been of the view as a country that this has to be something ideally agreed on an international basis, but it’s not that DST has been put in place as something that can never change or we can never have a conversation about it.”
Insisting that the Government was “committed to making sure tech companies pay a fair amount of tax in the UK”, he added that the US had expressed “concerns about the specific structure of that”, but said it was not “a major part of the conversation” on tariffs.
Asked about Mr Reynolds’ comments, Downing Street declined to comment on the talks.
Asked if changing the tax was part of ongoing trade talks with the US, a Number 10 spokesman said: “We’re not going to provide a running commentary on the details of trade talks.”
He added: “We’re just not going to comment on every aspect of the trade talks as they continue.”
DST was introduced in 2020 in what was intended as a temporary move prior to an international agreement on digital taxation.
Meanwhile, the Liberal Democrats urged the Government to rule out cutting or abolishing the tax, with deputy leader Daisy Cooper saying it would be “unforgiveable if the Government goes ahead with cutting taxes for US tech barons to appease (Elon) Musk and Trump”.
Arguing that scrapping the tax would cost £5 billion over the next five years, she added: “Ministers need to confirm that they won’t bow down to Trump’s threats, and that instead the UK will stand strong with our allies in Europe and the Commonwealth.
“That means the Chancellor needs to categorically rule out cutting the digital services tax in any way.”
Mr Trump announced 25% tariffs on car imports to the US on Wednesday night, due to come in on April 2 when he is also reported to be planning to impose a series of other tariffs.
The Government has said talks are still ongoing as the UK attempts to secure exemptions from the tariffs, which the Office for Budget Responsibility has forecast could knock as much as 1% off GDP.
