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UK collects £360m from Big Tech via digital services tax

Digital services tax

The UK has raised £360m from US Big Tech firms through the digital services tax (DST) over the 2020/21 tax year, more than the amount raised through corporation tax.

In a report published today by the National Audit Office (NAO), it was revealed that government revenue raised by the DST was greater than originally forecast. HMRC predicted in July 2019 that the digital tax would bring in £275m, 30% lower than the actual figure.

The report also revealed that the majority of relevant digital businesses paid more in DST than they did in standard Corporation Tax, which saw a total figure raised of £351m.

The DST was introduced in April 2020 to tax digital businesses that provide social media platforms, search engines, or online marketplaces and have a global turnover of more than £500m, with at least £25m derived from UK users.

Companies that fall under the tax include US tech giants such as Google, Amazon, Meta, Apple, and eBay.

“The Digital Services Tax has succeeded in raising more tax from some big digital companies and has brought in more money than forecast in its first year,” said NAO boss Gareth Davies.

“However, HMRC could still face challenges enforcing compliance, especially among groups without a physical presence in the UK. It should ensure that big digital companies operating beyond the UK’s borders are aware of the tax and comply with it.”

HMRC has not yet identified any non-compliance issues from relevant businesses, however, the checks are still ongoing.