Amazon, Google, Facebook and other technology behemoths could be hit by a new tax in the U.K.
The U.K. is set to become the first developed economy to impose a tax that specifically targets large technology companies. British Finance Minister Philip Hammond on Monday revealed his annual budget, which includes a proposed “digital services tax” of 2 percent on revenue generated from U.K. users.
The levy, which is scheduled to go into effect in 2020, will apply to companies that record a profit and generate at least 500 million British pounds, or about $640 million, in global annual revenue. The U.K. government expects to generate 400 million British pounds in new tax revenue as a result.
“It’s clearly not sustainable, or fair, that digital platform businesses can generate substantial value in the U.K. without paying tax here in respect of that business,” Hammond said during his budget presentation to the British parliament.
Hammond added that the tax will be “narrowly targeted,” saying tech startups will not shoulder the burden.
The European Union is considering its own tax on large tech firms, and members of the Organization for Economic Cooperation and Development have sought to form a compromise on taxing digital business across borders by 2020.
Hammond said a global agreement remains the “best long-term solution,” but the U.K. is moving forward with its own tax amid slow progress in those talks.
Amazon shares were down more than 5 percent Monday. Facebook and Alphabet, Google’s parent company, also fell in recent trading.