The Government is introducing from April 1, 2020, a new two percent digital services tax on the revenues earned by certain digital businesses.
UK’s new chancellor, Rishi Sunak, today presented his first Budget to Parliament.
The Government will legislate to retain the current 19 percent corporate tax rate in April 2020 to provide support for vital public services while maintaining the UK’s competitive rate. The rate was earlier proposed to be reduced to 17 percent.
The Government is introducing from April 1, 2020, a new two percent digital services tax on the revenues earned by certain digital businesses.
The digital services tax is aimed at ensuring the amount of tax paid in the UK reflects the value these businesses derive from their interactions with, and the contributions of, an active user base. The legislation would require businesses to pay the tax on an annual basis.
The Government will consider how the legislation applies to marketplace delivery fees and whether that application is consistent with the policy rationale of the digital services tax.
Finally, the Government will publish a consultation on the corporation tax rules that apply to hybrid mismatch arrangements that seek to exploit the differences in tax treatment between two jurisdictions. The consultation is aimed at ensuring that the hybrid mismatch rules work proportionately and as intended.
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable at editor@transferpricingnews.com
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