Britain said it would tax the revenue that online platforms such as Google, Facebook and Amazon make in the country to update a system that had not kept pace with changing digital business models. Amazon was down 9 percent, touching six-month low, while Google was off 5.5 percent and Facebook was trading lower 3.5 percent.
Netflix and Apple, the others in the so-called FAANG group of stocks, were down 8 percent and 3.6 percent respectively. "It's clearly not sustainable, or fair, that digital platform businesses can generate substantial value in the UK without paying tax here in respect of that business," finance minister Philip Hammond said in his annual budget speech on Monday.
The tax will be designed to ensure established tech giants, rather than start-ups, shoulder the burden, Hammond told parliament. The Treasury said profitable companies would be taxed at 2 percent on the money they make from UK users from April 2020, and the measure was expected to raise more than 400 million pounds ($512 million) a year. The tax will be based on self-assessment by the companies.
"A tax take of 400 million pounds or so might seem a small number when you consider that Amazon alone is expected to post sales of $233 billion this year. But the worry for the tech giants, and their shareholders, is that this is the pebble that starts an avalanche of taxes from international governments," Hargreaves Lansdown analyst Laith Khalaf said.
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