UK Digital Services Tax raises 800M from global tech giants

"Introduced in 2020, the tax is designed to apply to multinational enterprises with revenue derived from the provision of a social media service, a search engine, or an online marketplace to UK users. It was created to replace previous corporate tax rules for businesses operating in the digital economy, which led to a "misalignment between the place where profits are taxed and the place where value is created.""

"The DST introduces a 2 percent tax on in-scope revenue. A crude estimate of the above figures alone would suggest a tax revenue of more than £900 million, but not all of these companies' UK revenue is taxable. "For large groups that may have revenues in other activities, the DST only applies to... search engine, social media, and online marketplace revenues that generate over £500 million in global revenues from those activities and where more than £25 million of that is from UK user-related activities," a Treasury official told The Register."

The UK government collected £800 million in Digital Services Tax from major tech firms in the most recent tax year. The DST targets revenue from social media, search engines, and online marketplaces and applies a 2 percent levy on in-scope revenue. Large groups face thresholds: the tax only applies to digital revenues within groups that generate over £500 million globally from those activities and more than £25 million from UK user-related activities. Major companies generate billions in UK sales, so threshold rules and non-taxable revenues substantially reduce potential DST receipts. The UK supports OECD-led international tax reform as a long-term solution.

Read at Theregister