PayPal caught up in technology tax crackdown

PayPal is among the first global tech giants to come under the hammer of HM Revenue & Customs’ (HMRC) new tech tax policy after it agreed to pay an extra £2.7 million in tax.

The California-based organisation’s filings show that its UK tax bill increased to £4.13 million in 2017, up from £159,000 the year previous.

The announcement comes after the Treasury published draft plans to tax global companies, such as PayPal, Facebook and Google, on revenue generated in the UK.

It involves extrapolating how much money companies generate from UK users and taxing what is due.

PayPal, for example, charges a levy on vendors for using its service, many of whom are based in England and Wales.

The organisation says its revised tax bill is a result of consultations with HMRC.

“This review is now complete. As a consequence, the company has agreed and settled its outstanding liabilities and as a result is not subject to any current enquiries,” it said.

It was also revealed this week that Facebook’s tax bill had tripled to £15.8 million, while Airbnb is currently in dispute with HMRC over its operations and transactions between company divisions.

Full details of the technology tax are expected to be disclosed in this year’s Autumn Budget, but experts have warned that it may actually end up damaging start-ups and innovation in the UK.

Dom Hallas, from The Coalition for a Digital Economy, said: “The tech giants Hammond claims to be targeting are in fact best placed to deal with an increased tax burden. The true cost will be in hurting innovative British companies who want to develop at home then grow globally.”