Finance Bill 2019-20: Details of digital services tax published

Released 11 July 2019

HMRC have published a policy paper setting out the details of the new digital services tax, which will apply from April 2020.

Responses to the recent consultation on the tax itself and draft guidance are also available. The draft guidance is subject to consultation until 5 September 2019.

Broadly, the digital services tax will affect large multi-national enterprises with revenue derived from the provision of a social media platform, a search engine or an online marketplace (‘in scope activities’) to UK users, by imposing a new 2% tax on such revenues.

Businesses will be liable to the tax when the group’s worldwide revenues from these digital activities are more than £500m and more than £25m of these revenues are derived from UK users. If the group’s revenues exceed these thresholds, its revenues derived from UK users will be taxed at a rate of 2%. There is an allowance of £25m, which means a group’s first £25m of revenues derived from UK users will not be subject to digital services tax.

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