Tuesday , October 19 2021

Tax risk of digital services on the credit rating of technological giants



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Straight– The British digital service tax plans to impose on technology giants that will reduce their cash flows in the coming years and will reduce the interest rates of US tax cuts, Moody's said.

The British government has announced that it will impose taxes of around 2% against the big technology companies as of April 2020, but waiting for the approval of the parliament.

Moody's vice president, Neal Bigley, said Monday that the tax would generate a negative credit rating for companies such as Amazon, Google and Facebook, which have annual global revenues of at least $ 500 million using aggregate customer data. United Kingdom, According to the newspaper "The Financial Times."

Mr Bigley said "Alphabit and Facebook" are the main goals of this tax because they retain about two thirds of global digital advertising revenues.

Although the UK tax proposal will not prevent companies like Alphabit and Facebook from collecting the necessary data to deliver ads, it still represents a new cost for them, said Bigley.

Moody's vice president added that if they fail to overcome this potential increase in cost for customers, this will reduce free cash flow in the coming years.

If the proposed tax is approved, other European and Asian countries would be encouraged to impose such a tax, said Beagleley.

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