Tech giants like Facebook and Google face UK tax shake-up focusing on revenues rather than profit

Some of the world’s largest tech firms are set to face a significant tax shake-up from the UK government.

The likes of Google and Facebook could see changes in the tax system that would mean a new tax on revenues, rather than profits – a smaller figure.

A Treasury minister told the BBC that the revenue tax was the “potentially preferred option” after a government review.

Read more: Brussels vows to push ahead with digital tax plans aimed at tech giants

“At the moment [they] are generating very significant value in the UK, typically through having a digital platform with lots of users interacting with that platform,” Mel Stride, the financial secretary to the Treasury, told the BBC.

That is driving a lot of value, so you’re looking at social media platforms, online marketplaces, internet search engines – where at the moment the tax regime is not taxing those activities fairly.

We want to move to a situation where we are taxing those activities fairly.

In 2016, Google reported revenue of £1bn in the UK and pre-tax profit of £149m.

Stride’s comments follow the launch of a government consultation into potential changes to taxation of the digital economy.

It aims to examine concerns that tech giants are not paying enough tax – though firms have said they adhere to the law.

It follows a move by Brussels to push ahead with digital tax plans aimed at Apple, Google, Facebook and Amazon.

The economic commissioner for Europe Pierre Moscovici said efforts are moving forward to bring the taxation of digital companies in line with traditional firms.

“Corporate tax frameworks were conceived in a pre-internet age and are confounded by today’s globalised and digital companies. That calls for a fundamental overhaul of our corporate tax systems,” he said.

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