Treasury denies chancellor is looking to ditch digital sales tax

The government said the digital sales tax was a “proportionate measure” that ensured the likes of Amazon, Facebook and other large, international tech companies “pay their fair share of tax in the UK”.

However, the government stressed the tax, designed by former chancellor Philip Hammond and introduced in March at Rishi Sunak’s first budget, was “a temporary tax that will be removed once an appropriate global solution is in place – and we continue to work with our international partners to reach that goal”.

The Treasury was forced to make the statement following a story in the Mail on Sunday that said Sunak was considering ditching the tax as it was as an impediment to a potential post-Brexit trade deal with the USA. 

Sources said because the tax would only raise around £500m it was not worth endangering a trade deal over. 

The US government has urged the UK to reconsider the tax due to it being too “punitive”.

The tax targets technology and digital companies with UK revenues in excess of £25m a year such as Amazon, Google and Facebook.

In June, Sunak, along with finance ministers in France, Spain and Italy, signed a joint letter that said the tech giants needed “to pay their fair share of tax”, noting that many had become even more profitable during the coronavirus crisis.