Tucked away in the Chancellor’s low-key Spring Statement last week was a reference to a Treasury document entitled Corporate Tax and the Digital Economy: Position Paper. It seeks to answer a question vexing governments around the world: how to extract tax revenues from global technology companies.
The existing international tax framework is based on the principle that the profits of a business should be taxed in the countries in which it creates value. But huge companies such as Amazon and Facebook avoid tax by saying they make no profit. In 2016, Amazon paid just £15m in corporation tax in Europe on estimated revenues of £19bn.