UK government to impose 2% digital services tax

Government reported to be working on “excessive profits tax” for online giants after coronavirus windfall
Online retailers that saw booming profits during the coronavirus pandemic may be faced with new tax charges from UK government.
// Government confirms launch of digital services tax to collect 2% of online revenues in UK
// The tax will be introduced on April 1
// HMRC said it could result in as much as £515m in additional annual income

The UK government will introduce a digital services tax to collect two per cent of revenue generated by companies such as Amazon.

Although it was not mentioned during Chancellor Rishi Sunak’s Budget speech, the government confirmed the tax will be introduced on April 1.

HMRC said it could result in as much as £515 million in additional annual income by the end of the 2025 financial year.


The tax is expected to impact “large multi-national enterprises with revenue derived from the provision of a social media service, a search engine or an online marketplace to UK users”.

Among these companies, Amazon has often been criticised for paying very little tax on the large revenues which it generates in the UK.

Meanwhile, businesses will be liable for the tax when worldwide revenue from digital activities is more than £500 million and over £25 million of this revenue comes from UK users.

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