The proposal would see USA giant firms in the likes of Facebook, Google, and Amazon paying additional taxes in the United Kingdom aside from the taxes they are already paying in the countries where their main headquarters are operating.
The UK's ministry for economic and finance has announced a new tax targeting corporate tech giants.
The European Commission, in March, suggested that a blanket 3% tax be applied on digital companies that had annual worldwide revenues of €750 million (US$925.6 million) and EU revenues of €50 million.
UK Chancellor Philip Hammond has used the Budget to confirm additional funding of over GBP 200 million to help full fibre broadband networks reach rural areas. But speaking later on BBC Radio 4's Today programme, Mr Hammond said: 'When you make a promise to the electorate and they elect you then you have an obligation to deliver on that promise.' The Institute for Fiscal Studies yesterday said the Conservatives had pulled nearly a million people into the higher tax bracket in the past eight years.
"We talk about it a lot more which is good but there is still a long way to go until we get parity between the two".
Rather than using the extra money to balance the books, he pledged much of the cash to public services and tax cuts. While the details of the new tax will be out after the government consults experts in the field the tax will be created to ensure it is established tech giants - rather than local tech start-ups shoulder the burden of this new tax.
In his annual budget speech on Monday, finance minister Philip Hammond said that it is not sustainable or fair that digital businesses are able to generate substantial value in the United Kingdom without paying their taxes here in respect to that business.
He added: "Google and Amazon have been avoiding tax payments which has given them an unfair edge over the competition [but] online retailers' financial advantage over bricks and mortar competitors is not the reason for the struggle and failure of traditional high street names".
The Resolution Foundation think tank had said earlier its analysis showed the tax cuts would "overwhelmingly benefit richer households", with nearly half (45%) set to go to the top 10% of households alone.
Half of the £730 Budget tax break handed to millions of workers will be snatched back through a stealth raid, it emerged yesterday.
This will make digital goods more expensive to consumers and may crimp on businesses' revenues.
Higher earners would have had £860 a year savings after the tax cuts.
Tech companies that generate more than £500 million a year in global revenue will be the targets.
This 2 percent compares differs to the 2 to 6 percent of turnover tax that had been mooted previously by French economy minister Bruno Le Maire.