Budget: Chancellor Announces New Tax For Tech Giants

The new two per cent UK tax on the tech giants must be followed by robust action to address the unfair exploitation of third party content by Google and Facebook, the News Media Association has said.

The NMA welcomed the announcement of the new digital services tax, which will be introduced in April 2020, and said that the next step must be to understand how the platforms are exploiting content created by third parties.

The NMA said: “This new tax is welcome recognition of the fact that the tech giants are extracting enormous value from the digital ecosystem, both globally and here in the UK, but contributing very little in return.

“The next step must be to gain a full understanding of the extent to which Google and Facebook are monetising content created by other parties, such as news media publishers, and to put in place effective and robust remedies to address this imbalance.”   

In its submission to the Cairncross review, the NMA has called for a “fair and equitable” content licence fee agreement would ensure that news media publishers are appropriately rewarded for the use of their content by the tech giants.

It is one of 42 measures and initiatives proposed by the news media industry to protect independent journalism. The NMA also joined Ofcom and UK broadcasters in calling for independent regulatory oversight of the tech platforms, and for the launch of a competition inquiry into the dominance of the tech giants.

The chief executive of the Competition and Markets Authority said last month that the body was “actively considering” looking into the digital advertising market.

In his budget this week, the Chancellor also announced that the scheme for local newspapers to claim £1,500 relief on business rates for office space occupied by local newspapers has been extended for another year.

The scheme was originally planned for two years, ending in April 2019, but will now continue for a further year following the announcement.

Reacting to the budget, the Professional Publishers Association said it was disappointed that the opportunity had not been taken to extend the VAT exemption to digital publications, as called for by bodies including the NMA and the PPA.