Digital Services Tax

The Chancellor has introduced a new tax from April 2020 on digital businesses to ensure the tax they pay in the UK is reflective of the profits they make from their UK customers.

The Digital Services Tax will be charged at 2% on the revenues of digital businesses providing search engines, social media platforms and online marketplaces – Google, Facebook and Amazon perhaps being the most obvious examples of each of those three categories. It will apply to revenues generated from the participation of UK users and will only apply to large profitable digital businesses - the technology giants who have attracted much political and media attention for the small amounts of UK Corporation tax they pay to the Exchequer.

The Chancellor says he has grown tired of waiting for combined global action against the tech giants so has acted unilaterally. He was at pains to emphasise it was not a transaction tax and therefore users and consumers should not be affected. We suspect that it is also a small cog in the battle to rejuvenate the high street, although much more direct action will be required to help small business in the battle against giants like Amazon etc.

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