The issue of taxing internet giants could take the United States and Britain on a collision course.

Starting from 2020, all large search companies, social media platforms and online marketplaces operating in the United Kingdom would be levied a tax of 2 per cent on the revenues that they earn form the country. Draft legislation to this effect was recently introduced in the UK parliament.

The draft legislation contains provisions that are almost similar to the 3 per cent tax that was recently imposed on large tech companies by France which has been scorned at by the United States president Donald Trump and his administration – claiming that the tax may “unfairly target” US tech companies such as Facebook and Google.

The tax in both the countries is only applicable to the largest of the tech companies and American companies make up a large section of such firms. Some of the companies that will face the tax include the likes of Facebook, Amazon and Google owner Alphabet.

The by France to impose the tax was retaliated to by the US by initiating an investigation under the so-called Section 301 investigation that could result in the US imposing punitive retaliatory tariffs on French goods imported into the country. A similar treatment could be initiated in the case of the United Kingdom if the tech tax is imposed there.

The relationship between Washington and London has come under strained in recent days after the leak of UK diplomatic cables that were critical of President Donald Trump and is the US initiates a similar inquiry as it has in the case of France, the relations would be strained further.

There were no comments available from the UK Revenue and Customs department about the possibility of the US initiating an investigation under the so called Section 301. There were also no comments available from the United States Trade Representative.

The United States has been rooting for a a global corporate tax overhaul being put into place and wants countries to refrain from imposing such taxes till such time.

A plan to overhaul the global corporate tax rules and resolve the challenges in taxing digital companies prepared by the Organization for Economic Cooperation and Development was broadly supported by the G20 finance ministers this June. However that plan will take years to get implemented, say experts.

But it would push on to implement the tech tax, says the UK government, even while it says that it supports the global tax reform attempts being made by the OECD and the G20 countries.

“The government still believes the most sustainable long-term solution to the tax challenges arising from digitalization is reform of the international corporate tax rules,” the UK government said in a statement. The government has also added that the UK would drop its own tax once an adequate international solution was arrived at. However the plans could be complicated by Brexit.

“We’ve got to find a way of taxing the internet giants on their income, because at the moment it is simply unfair,” said Boris Johnson, the likely successor to the UK Prime Minister Theresa May, earlier this month, according to Reuters.

(Adapted from CNN.com)

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