U.K. Election in December Puts Digital Services Tax on Hold

A December election in the U.K. will mean that the government’s draft finance bill, which includes a proposal to tax digital giants, will be shelved.

• The finance bill for 2019-20 proposed a 2% tax on the digital revenue of companies such as Facebook Inc. and Amazon.com Inc.
• The House of Commons voted Oct. 29 438 to 20 on a bill calling for an early election on Dec. 12.
• The measure now heads to the House of Lords for a vote. The upper chamber typically follows the view of the lower one, meaning that an early general election is now a near certainty. An election in December means most pending business in Parliament will be shelved.
• “The Chancellor and Prime Minister agreed not to take forward the Budget on 6 November. It is usual practice for the Finance Bill to follow a Budget,” a spokesman for Her Majesty’s Treasury said Oct. 29. In the absence of movement on a budget bill, action on the finance bill will also be stalled.
• Other measures in the finance bill included limitations on the amount of capital losses that companies can offset against profits, and expanded rules for when a temporary worker can be considered a full-time employee, triggering social security taxes and employee taxes.
• Prime Minister Boris Johnson called for a general election after Parliament rejected fast-tracking his Brexit deal by Oct. 31.

—With assistance from Alex Morales, Robert Hutton, and Greg Ritchie (Bloomberg).