Press release

UK to consult on new UK Digital Services Tax

29 October 2018

Zubin Patel, corporate tax partner at Deloitte, comments: 

“The Chancellor has planted a stake in the ground by announcing plans to increase the level of taxation from companies which operate in the digital economy from April 2020. While the Chancellor has made it clear that the UK’s preference is for this issue to be addressed through global agreement, in the absence of such consensus, the Chancellor is prepared for the UK to act unilaterally in relation to taxing companies which derive material revenue from the digital economy.

“The proposal would apply a Digital Services Tax (‘DST’) of 2% on digital revenues from UK users which arise from search engines, social media platforms and online marketplaces.  The DST will only apply to businesses which are profitable and which generate more than £500m a year in global revenues from these activities. The measure is estimated to raise £1.5 billion of tax over four years.  There will be further consultation on the detail of the proposal, which is temporary and subject to formal review in 2025.

“There is broad consensus that a global solution to the taxation of the digital economy would be the only way of creating a long term, sustainable position. However, a number of countries have become concerned at the length of time it is taking to reach agreement and, following the example of Spain and Italy, the UK is now seeking to introduce a DST unilaterally unless international agreement is reached.”

 

 

Note to editors

Follow us on Twitter: 

@DeloitteUK for live comment;

@DanielFLyons1 for Daniel Lyons, Head of Tax Policy; and

@IanStewartEcon for Ian Stewart, chief economist

Deloitte spokespeople

Experts from Deloitte are available now and on the day of the Budget for comment. On Monday 29 October, please call the Deloitte Media hotline on 020 7007 3333, where you will be directly connected to one of our spokespeople.

About Deloitte

Deloitte LLP is the United Kingdom affiliate of Deloitte NWE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”). DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NWE LLP do not provide services to clients. Please see About Deloitte to learn more about our global network of member firms.

Contact