UK’s latest step could impact tax loophole favoured by Big Tech

A small provision buried in the budget, unveiled this week by UK Chancellor of the Exchequer Rishi Sunak, could eventually lead to larger tax bills for multinational technology firms.

Sunak’s plan repeals legislation that means companies based in European Union member states could stop benefiting from tax exemptions on intra-group interest and royalties payments. While the immediate impact is small, it potentially removes a barrier to future changes that could target tax haven payments utilized by big tech companies, experts say.

“This feels like an important step, albeit small, to help the UK curtail tax avoidance via profit-shifting,” said Paul Monaghan, chief executive officer of UK-based Fair Tax Mark, by email.