Budget 2018: the chancellor announced that the UK will proceed with a Digital Services Tax from April 2020.
The new tax will be based on 2% tax of revenues of certain large digital businesses which derive value from their UK users.
It will apply:
- To revenues generated from the provision of the following business activities: search engines, social media platforms and online marketplaces;
- To revenues from those activities that are linked to the participation of UK users, subject to a £25m per annum allowance;
- Only to groups that generate global revenues from inscope business activities in excess of £500m per annum.
It include a safe harbour provision that exempts loss-makers and reduces the effective rate of tax on businesses with very low profit margins.
HMRC Digital Services Tax