Budget 2018: Philip Hammond takes aim at Amazon, Google and Facebook by announcing new tax on 'global tech giants'

Philip Hammond has announced a new tax on tech giants as he demanded multi-billion pound companies "pay their fair share".

Delivering the 2018 Budget in the House of Commons, the Chancellor said he would introduce a digital services tax set to come into effect in 2020.

The measure is forecast to raise over £400m a year and will likely hit giants including Amazon, Google and Facebook.

Mr Hammond told the Commons: "The rules of the game must evolve now if they are to keep up with the emerging digital economy.

"It is only right that these global giants, with profitable businesses in the UK, pay their fair share towards supporting our public services."

Of tech giants, Mr Hammond said: "They pose a real challenge for the sustainability and fairness of our tax system. The rules have simply not kept pace with changing business models and it is 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."

The "narrowly targeted" tax will apply to revenues generated in the UK and will be "carefully designed to ensure that it is established tech giants, rather than our tech start-ups, that shoulder the burden", Mr Hammond said.

It will only apply to companies that are profitable and have global revenues of over £500m a year.

While the government will continue to work with other countries to introduce an international tax on tech companies, and believes this remains "the best long-term solution", the chancellor said progress of talks aimed at achieving this had been "painfully slow" and added: "We cannot simply talk forever".

Mr Hammond quipped that he was "looking forward to my call from the former leader of the Liberal Democrats" - a reference to Nick Clegg, who was appointed last week to a senior role at Facebook.

The chancellor hinted at the new digital services tax earlier this month, telling the Conservatives' annual conference that the UK was ready to act without international support.

He said: "The best way to tax international companies is through international agreements, but the time for talking is coming to an end and the stalling has to stop.

"If we cannot reach agreement, the UK will go it alone with a digital services tax of its own."

Suggesting "too much power is being concentrated in too few global technology businesses", Mr Hammond compared tech giants to the "near-monopoly of Standard Oil and the railroad cartels" in 19th-century America.