Connect with us

World

Facebook, Google could face a UK tax overhaul, report says

Published

on

Facebook and Google could soon have much higher taxes in the U.K., according to a BBC report.

Regulators are eyeing a proposal that would tax the internet giants on total revenue, instead of profit, the British government’s economic policy agency told the news outlet. That would tax the companies more proportionally based on the amount of business they do in the U.K.

European authorities have been considering the idea of higher taxes for digital giants for months.

“At the moment [they] are generating very significant value in the U.K., typically through having a digital platform with lots of users interacting with that platform,” Financial Secretary to the Treasury Mel Stride told BBC.

“That is driving a lot of value, so you’re looking at social media platforms, online marketplaces, internet search engines — where at the moment the tax regime is not taxing those activities fairly,” Stride said.

A change could be announced as early as mid-March, BBC reports.

Read the full BBC report here.

Source link

World

Eric Schmidt’s National Security Commission on AI issues China warning

Published

on

Eric Schmidt speaks during a National Security Commission on Artificial Intelligence conference November 5, 2019, in Washington

Alex Wong | Getty Images

The U.S. is drastically underprepared for the age of artificial intelligence, according to a group of experts chaired by former Google CEO Eric Schmidt.

The National Security Commission on AI warned in a 756-page report on Monday that China could soon replace the U.S. as the world’s “AI superpower” and said there are serious military implications to consider.

“America is not prepared to defend or compete in the AI era,” wrote Schmidt and vice chair Bob Work, who was previously the deputy secretary of defense in the U.S. “This is the tough reality we must face.”

The commission began its review in March 2019 and this is its final report for the U.S. president and Congress. The 15 members of the commission include technologists, national security professionals, business executives, and academic leaders. Amazon’s next CEO, Andy Jassy, Oracle CEO Safra Catz, Microsoft chief scientific officer Eric Horvitz, and Google Cloud AI chief Andrew Moore are all members.

Schmidt and Work say the report presents a “strategy to defend against AI threats, responsibly employ AI for national security, and win the broader technology competition for the sake of our prosperity, security, and welfare.”

A.I. to move beyond sci-fi

They warn that AI systems will be used in the “pursuit of power” and that “AI will not stay in the domain of superpowers or the realm of science fiction.”

The report urges President Joe Biden to reject calls for a global ban on highly controversial AI-powered autonomous weapons, saying that China and Russia are unlikely to keep to any treaty they sign.

“We will not be able to defend against AI-enabled threats without ubiquitous AI capabilities and new warfighting paradigms,” wrote Schmidt and Work.

Samim Wagner, an AI researcher in Berlin, sees things differently, telling CNBC that AI weapons and killer robots will make today’s weapons even more deadly.

“[Adopting AI weapons] is brutal inanity and everyone knows it yet think tank staffers from DC to Beijing keep assuring us it’s ‘progress and necessary’.”

He added: “A real discussion around ‘how AI can help to promote peace globally’ is what is truly required – but you certainly won’t find it on the agenda of Pentagon operatives or intelligence agency billionaires like the Eric Schmidts of the world.”

China has stated that it wants to be a global leader in AI by 2030 and the report’s authors have said it is vital that the U.S. does all it can to eliminate the chance of this happening.

“We must win the AI competition that is intensifying strategic competition with China,” said Schmidt and Work. “China’s plans, resources, and progress should concern all Americans. We take seriously China’s ambition to surpass the United States as the world’s AI leader within a decade.”

They added that China’s domestic use of AI is “a chilling precedent for anyone around the world who cherishes individual liberty.”

A.I. proposals

The commission calls on the U.S. government to more than double its AI research and development spending to $32 billion a year by 2026.

It also suggests establishing a new body to help the country’s president guide the U.S.’s wider AI policies, relaxing immigration laws for talented AI experts, creating a new university to train digitally skilled civil servants, and accelerating the adoption of new technologies by U.S. intelligence agencies.

The report also warns that the U.S. needs to do more to become self-reliant on computer chips, and warns about the dangers of being so dependent on Taiwan’s TSMC.

“Microelectronics power all AI, and the United States no longer manufactures the world’s most sophisticated chips,” wrote Schmidt and Work. “Given that the vast majority of cutting-edge chips are produced at a single plant separated by just 110 miles of water from our principal strategic competitor, we must reevaluate the meaning of supply chain resilience and security.”

Source link

Continue Reading

World

Tax hikes, furlough extensions, hawkish tone: Predictions for UK budget

Published

on

Chancellor of the Exchequer Rishi Sunak leaves 10 Downing Street after attending a Cabinet meeting on 14 February, 2020.

Barcroft Media

As British Finance Minister Rishi Sunak prepares to set out the country’s economic path to recovery, analysts are weighing the possibility of tax hikes and a nod to future fiscal tightening.

The budget, due on March 3, comes as nationwide Covid-19 restrictions are set to be gradually unwound over the coming months, culminating in full removal on June 21. Meanwhile, more than 20 million people in the U.K. have now received a first vaccine dose.

Sunak told the BBC over the weekend that his budget will “provide support,” but cautioned that the “shock to the economy” would not be a quick fix.

The government has embarked upon unprecedented public spending as the economy posted its sharpest contraction in more than 300 years in 2020. At Sunak’s last fiscal announcement in November, he unveiled the country’s largest peacetime budget on record.

Sunak is broadly expected to keep some of the government’s support beams for the economy in place until restrictions are eased, most notably extending the furlough scheme until at least June in a bid to stave off an unemployment crisis, according to Dean Turner, economist at UBS Global Wealth Management.

“Following the Chancellor’s announcement of a £5 billion ($7 billion) company grant scheme, we may also see more generous lending terms to companies announced, as well as an extension to tax exemptions in order to help firms through what will hopefully be the last phase of lockdowns and, crucially, the recovery thereafter,” Turner said in a statement Monday.

Morgan Stanley analysts are anticipating a £20 billion package of measures, including a furlough extension, a targeted support program for pandemic-sensitive sectors, and a one-off payment to benefit claimants affected by the expiry of the £20-per-week boost to Universal Credit, the British social security payment.

Tax hikes?

The U.K. has taken on a direct fiscal cost of £285 billion ($397 billion) since the onset of the pandemic, or 13.7% of GDP, according to the Office for Budget Responsibility (OBR), which has cautioned of a lasting hit to public finances.

As a result, some analysts cautiously expect the Chancellor to look to raise some cash in Wednesday’s budget.

Morgan Stanley Head of European Economics Jacob Nell and U.K. Economist Bruna Skarica said Sunak could announce tax hikes, touting a potential corporation tax increase to 21% from the autumn, along with the introduction of an online sales tax and further action on green taxes.

“The UK’s fiscal stance remains more hawkish than its U.S. and euro area counterparts, with Chancellor Sunak stressing the need to put the public finances back on a sustainable footing after the pandemic,” Nell and Skarica said in a note Friday.

“While we expect him to sound hawkish next week, and deliver some tax hikes – perhaps £5 billion – as down-payment on his intent, we see him announcing fiscal tightening – perhaps 2% of GDP in tax hikes – only in the autumn, to come into force from April 2022.”

In all, Morgan Stanley predicts that this fiscal year’s £5 billion of additional tax receipts will rise to £10 billion next year.

“Further fiscal tightening we think – of 2% of GDP – will be announced in the autumn, once the UK has clearly recovered from COVID-19,” they said in a note Friday.

However, UBS’s Turner suggested that following a better-than-feared fourth quarter for the U.K. economy, the government’s fiscal position may not be as fragile as last reported by the OBR. As a result, UBS does not expect any immediate tax hikes, but suggested future changes to corporation tax were likely to be signaled along with other modest tweaks, such as pensions and freezing of income tax thresholds.

Must not ‘pull the rug out’

The U.K.’s better-than-expected fourth quarter means the government’s forecasts may be upgraded, according to Capital Economics Senior U.K. Economist Ruth Gregory, but she cautioned that a premature unwinding of fiscal support could be detrimental to the recovery.

The OBR currently projects that the economy will be 3% smaller than its pre-pandemic trajectory by 2026, with a budget deficit of about £100 billion (3.9% of GDP) in 2025/26.

Gregory determined that if Sunak wants the budget deficit to return to pre-pandemic levels by 2026, he might have to tighten fiscal policy by around £45 billion per year.

“Add in a desire by the government to raise taxes sooner rather than later so that tax rises don’t happen just before the 2024 general election, then it’s entirely possible that the Chancellor takes the first steps to claw back some revenue in this Budget,” she said.

However, she suggested that the immediate priority will be preventing long-term economic scarring, and Sunak will for now be content to signal intent to tighten at future fiscal announcements.

Capital Economics expects Sunak to announce a loosening in fiscal policy relative to current plans amounting to about £25 billion (1.2% of GDP) in 2021/22.

“But the risk is that over the next two years he will be tempted to pull the rug out from under the feet of households and businesses by reducing the budget deficit at a faster pace than is currently scheduled,” Gregory said.

“Not only would that undermine the economic recovery, but it could also cause more problems for the public finances than it solves.”

Source link

Continue Reading

World

Chip shortage will hit electric car production

Published

on

A Nio Inc. ES6 electric SUV at a battery swap station inside a parking lot in Shanghai on March 1, 2021.

Qilai Shen | Bloomberg | Getty Images

BEIJING — Chinese electric car start-up Nio said Tuesday a global chip shortage will force it to manufacture fewer cars in the second quarter.

High demand for electronics amid the coronavirus pandemic and pressure from U.S.-China trade tensions on the highly specialized semiconductor supply chain have contributed to a backlog in chip manufacturing.

Major automakers have had to cut production as a result, with China-based Nio the latest to announce such reductions.

The company had ramped up production capacity in February to 10,000 vehicles a month, an increase from 7,500 previously, founder William Li said in a quarterly earnings call Tuesday. But a shortage in chips and batteries means Nio will need to fall back to the 7,500 level in the second quarter, he said.

Nio predicts strong deliveries

Despite competition from Tesla, Nio remained ahead of its start-up rivals in terms of vehicle sales.

The company delivered 7,225 vehicles in January and 5,578 in February amid the week-long Lunar New Year holiday. With a forecast of 20,000 to 25,000 deliveries in the first quarter, Nio anticipates deliveries will rise to at least 7,197 cars in March.

In contrast, Xpeng said Tuesday it delivered 2,223 electric cars last month, while Li Auto expects it will deliver fewer than 4,000 cars a month in the first quarter.

Nio founder Li said that pre-orders for the et7 sedan revealed in January have exceeded that of the company’s other models, but declined to share specific figures. The et7 is Nio’s first non-SUV consumer car and is set to begin deliveries next year.

Li added the company remained on track with plans to enter Europe later this year.

Shares of New York-listed Nio fell 4% in extended-hours trading after reporting a fourth-quarter earnings loss of 0.93 yuan (14 cents) a share. That’s greater than the 0.39 yuan loss per share predicted by analysts, according to FactSet.

The company attributed a nearly 33% quarterly increase in net losses — to 1.39 billion yuan ($212.8 million) in the last three months of 2020 — primarily to the depreciation in the U.S. dollar.

Nio shares soared more than 1,000% last year after the struggling start-up received a roughly $1 billion capital injection from state-backed investors, and traders piled into the stock alongside a surge in Tesla’s shares.

Looking ahead, Nio expects total revenue of 7.38 billion yuan to 7.56 billion yuan in the first quarter, up from 6.64 billion yuan in the fourth quarter.

Source link

Continue Reading

Trending