From April 2020, the government will introduce a new 2% tax on the revenues of search engines, social media platforms and online marketplaces which derive value from UK users. It is a tax on sales not profits (so is harder to avoid) and does not affect other taxes including VAT.
The new Digital Services Tax will apply to businesses that provide a social media platform, search engine or an online marketplace to UK users. These businesses will be liable to the tax when the group’s worldwide revenues from these digital activities are more than £500m and more than £25m of these revenues are derived from UK users.
Welcoming the news, Damian said:
“In the election I highlighted the Digital Services Tax as important both for tax revenues, and for levelling the playing field for our high streets. The UK has led on driving towards an international approach on fair tax for global tech companies, but always clear we would go it alone if needed. If the tax prompts movement internationally, all to the good. If not, the principle stands.”
The government still believes the most sustainable long-term solution to the tax challenges arising from digitalisation is reform of the international corporate tax rules and strongly supports G7, G20 and OECD discussions on the different proposals for reform. The government is committed to dis-applying the Digital Services Tax once an appropriate international solution is in place.
More detailed information at: https://www.gov.uk/government/publications/introduction-of-the-new-digital-services-tax/introduction-of-the-new-digital-services-tax
