Commons Sense

House of Commons · Adjournment Debate

Netflix: Tax Affairs

03 February 2020 · 4 other contributors

Opened by Margaret Hodge Lab Barking

Taxation

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Margaret Hodge raised concerns about netflix: tax affairs in the House of Commons. A government minister responded. Other MPs also contributed.

Key points

  • Concerns raised about Netflix avoiding UK taxes through profit shifting to tax havens
  • UK taxes multinational companies based on profits attributable to economic activities within the country
  • Government takes action against profit diversion to low-tax jurisdictions through measures like diverted profits tax and ORIP rules

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Margaret Hodge Lab Barking

Thank you for selecting the debate, Mr Speaker. I have spent a decade campaigning against corporate tax avoidance and argue that Netflix is avoiding taxes through loopholes while receiving public funds via high-end TV tax relief. The company’s UK profits should be taxed here but instead are shifted to tax havens. Other countries like France and Brazil are implementing measures to collect taxes from digital companies, indicating the need for similar action in the UK. I urge the Government to include streaming services in the Digital Services Tax and adjust eligibility criteria for tax credits so that they reflect revenue earned within the UK.

Other contributors (4)
  • Jim Shannon Alliance Strangford

    Netflix's use of loopholes to avoid paying taxes is disgraceful, given that last year Netflix UK subscribers paid £700 million. The government must close these loopholes.

  • Catherine McKinnell Lab Newcastle upon Tyne North

    It's vital we get tax policy right so that companies like Netflix make their fair contribution to public services, especially given the austerity measures reducing funding for essential services.

  • Ian Paisley Jnr DUP North Antrim

    While acknowledging concerns about tax avoidance, it's important to note that Netflix has invested over £400 million in the UK and is creating jobs and fostering diversity in film-making.

  • Jonathan Reynolds Lab Stalybridge and Hyde

    Netflix's argument regarding intellectual property developed elsewhere does not hold up when considering that much of its content creation takes place in the UK, funded by tax credits.

Government Response

Jesse Norman

I thank the right hon. Member for Barking for calling this debate on an important topic that is of great public interest. The UK taxes multinational companies based on profits attributable to economic activities here, which means revenues alone are not a useful indicator of tax payments. However, the Government recognise and take robust action against profit diversion to low-tax jurisdictions through measures like the diverted profits tax and ORIP rules introduced in 2019. Internationally, we have supported OECD efforts to reform profit allocation rules for digitalised businesses. Regarding creative sector tax reliefs, the UK continues to support these industries through eight sector-specific reliefs that have significantly contributed to economic growth. The minister highlighted Brazil's withholding tax as an example of existing measures to tackle tax avoidance and noted that the Digital Services Tax is a temporary measure pending broader international agreement. Finally, he emphasised the importance of HMRC’s scrutiny of large businesses.

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