Change the law if you want more tax from tech firms, says Bill Gates

Bill Gates has suggested internet giants cannot be expected to pay more tax than they are legally required to and it will take public and political will to increase their contribution.

The billionaire Microsoft founder said web and tech companies should “have the book thrown at them” if they break tax laws, although changes to legislation will be needed if they are to hand over more to the Chancellor.

Mr Gates, who has given a large part of his fortune away, said he had “more than followed the law” and paid more than 10 billion dollars (£7.75bn) in taxes, but felt he “should have paid more” under a more progressive tax regime.

The philanthropist made the comments to the Daily Mail as the debate over how much internet firms such as Amazon, Facebook and Google should pay in the UK rumbled on.

There have been particular concerns over the disparity in how much tax is collected from internet retailers over traditional counterparts, which has been blamed in part for the demise of a string of high street firms.

In January the Daily Mirror reported that Amazon had paid less corporation tax in the UK over the last two decades than major retailers such as Marks and Spencer paid in one year alone.

The tax affairs of companies like Amazon, Facebook and Google are perfectly legal, although campaigners have accused web giants of taking advantage of the international tax system.

Mr Gates said: “You have to partition this into cases where companies are following the law and cases where they are not following the law.

“If they are not following the law, you should throw the book at them and collect the taxes. If they are following the law and you want more tax, then you should change the law.”

In his October Budget, Philip Hammond unveiled a “digital services tax” on large online firms that will take effect from April 2020.

Under the plans, social media platforms, search engines and online marketplaces will pay a 2% tax on the revenues they earn which are linked to UK users.

However experts said the amount set to be raised by the new tax was highly uncertain and small compared to traditional firms.

Even if the digital services tax raises the £400 million from global online firms claimed by the Chancellor, it would still be a low amount compared to the sums paid by businesses in UK corporation tax, the Institute for Fiscal Studies said.

The Labour Party has said it is looking at plans for a tax on online retailers as part of its proposals to support the British high street.