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The UK’s proposed digital services tax

The headline announcement in the UK’s Autumn Budget 2018 was a proposed digital services tax, or ‘DST’, to take effect from April 2020.

A consultation document published on 7 November 2018 provided further detail on the proposed design, implementation and administration of DST. The intention is that the UK DST will be a 2% tax on UK revenues derived from social media platforms, search engines or online marketplaces. These categories bring to mind certain big name multinationals, but the measures could apply more widely. Revenue thresholds are proposed to help small businesses and there is also a safe harbour for loss-making or low profit margin businesses (though the safety net gives an effective tax rate of 80%). There is significant potential for double taxation, and a question mark over consistency with the UK’s international treaty obligations.

Our London Tax team has produced a briefing which considers these proposals in detail and answers some key questions.

The full briefing is available at the link below.

Our London Tax team has also produced a related briefing on general tax issues for online platforms which is available here.

UK's proposed digital services tax - Nov 2018
(PDF - 1.1 MB)

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