UK Launches Consultation on Digital Services Tax

The UK Government is seeking stakeholders’ views on the detailed design, implementation, and administration of the proposed two percent digital services tax (DST).

The DST was announced by UK Chancellor Philip Hammond in his October 29 Budget Speech and is intended to apply from April 2020. The tax is aimed at ensuring that digital businesses pay tax that reflects the value they derive from UK users.

The UK DST would apply to companies generating over GBP500m in annual global revenues. It would apply to search engines, social media platforms, and online marketplaces.

The consultation document – published on November 7 – seeks input on key aspects of the proposed tax, including:

• The proposed features used to describe the business activities in scope of the DST;
• The proposed approach for attributing revenues to business activities;
• The proposed approach to defining a user or determining user location;
• Whether the safe harbor should be based on a UK and business activity-specific profit margin; and
• The need to introduce additional rules to ensure compliance with the tax.

The consultation closes on February 28, 2019.

See Consultation Document.