29 October 2018
In his October 2018 Budget speech, the UK Chancellor announced a radical new Digital Services Tax ("DST") on digital platforms that derive their economic value from the participation of UK users.
The DST significantly departs from the traditional allocation of international taxation rights between states. It does so by imposing UK tax on internet companies, even where they lack a UK taxable presence, on the basis of revenues deriving from UK users. This represents a crude proxy for the value generated by UK users on those sites. Many features of the DST are likely to be distortive, arbitrary and may be susceptible to legal challenge.
This briefing examines the key issues: what is the DST? Why introduce a DST? What is radical about it, and what are the problems with it?