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Digital services tax consultation - Law Society response

15 May 2019

The proposals

The government has announced that it will introduce a new digital services tax (DST) with effect from April 2020.

This is designed as an interim response, pending global reform, to the challenges that digital businesses create for the international tax system, as set out in the government's previous position papers.

The government consulted on the detailed design and implementation of that tax ahead of its inclusion in the 2019-20 Finance Bill.

Our view

We question the UK’s initiative to take unilateral action on DST at a time when the Organisation for Economic Co-operation and Development (OECD) is working on related proposals.

We also raised concerns about possible state aid implications of the proposals and their compatibility with the UK’s double tax treaty network.

We raised specific points on:

  • the definitional scope of the proposed tax
  • the means for calculating the tax base
  • the practicality of the safe harbour provisions for low margin digital businesses
  • the need for a review clause

What this means for solicitors

This is a significant and novel tax development particularly important for those solicitors who advise digital businesses.

Next steps

The consultation closed on 28 February.

The government has announced that the digital services tax will be included in the 2019-2020 Finance Bill.

Read the consultation on the GOV.UK website