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Aug 21, 2024 · The rise of social media has given birth to a new type of taxpayer: the influencer and content creator. We consider whether they need their own tax rules and guidance. What does it mean for me?
- Thresholds
- Digital Services Activities
- Online Marketplaces
- Calculating Digital Services Revenues
- UK Users
- Annual Allowance
- Rate of DST
- Alternative Basis of Charge
- Cross-Border Transactions
- Interim Measure
DST is targeted at large businesses that generate, within a 12-month accounting period, more than £500 million in global digital services revenues and £25m in UK digital services revenues. Only in-scope revenues exceeding £25m which are derived from UK users are subject to DST.
A group will only be in scope of DST if it generates revenues from 'digital services activities'. These are the provision of: 1. a social media service, 2. an internet search engine, or 3. an online marketplace. The definition also includes the carrying on of an online advertising service that is associated with any of these activities. In guidance...
The online marketplace definition is intended to cover online services which provide an online market for goods, services and other property by connecting users seeking something with other users who are willing to provide it. It is not intended to cover the online sales of e-commerce retailers or online sales generally. It only covers cases where ...
To calculate a group's liability to DST, it is first necessary to determine a group's total, worldwide revenues from digital services activities. These are called its 'digital services revenues'. Where a group's digital services revenues exceed £500m for an annual accounting period, it will be subject to DST on the amount of those revenues which ar...
A UK user is defined as one who it is reasonable to assume is an individual normally in the UK, or for a business it is reasonable to assume is a user established in the UK. For an individual, the question is where they are normally located, not where they are located at the time of the transaction. The legislation does not define 'normally in the ...
There is an annual allowance on the first £25m of UK digital services revenues so that DST is only payable to the extent that UK revenues exceed this threshold.
DST applies at a rate of 2% on UK digital services revenues above the annual allowance. It is a tax on revenues and not profits.
Groups which are loss making or operating at a low margin on their UK digital services activity can elect to calculate their DST liability using an alternative basis of charge. Under the alternative basis of charge, the DST tax rate is calculated by reference to the UK operating margin of the digital services activity. It will also ensure that wher...
In the case of cross-border transactions the revenues may be linked to both a UK user and a non-UK user. All the revenues from the transaction will be UK digital services revenues. However, some relief is available where the revenues arising from the transaction are also subject to a foreign DST charge. If a group makes a valid claim, its UK digita...
Although DST has been expressed by the UK government to be an interim measure until there is an internationally agreed solution to the challenges the digital economy poses to the international tax system, there is no 'sunset clause' in the legislation bringing the regime to an end at a particular time. However, the government has announced that the...
Apr 24, 2020 · The basics. The DST is a 2% tax on the VAT-exclusive revenues derived from UK users and is to be imposed on large businesses that provide a social media service, search engine or online marketplace.
Sep 25, 2020 · In this article, we delve into the question ‘does Google pay its taxes’ to unearth the truth behind the digital giant’s taxation history. How much tax did Google pay in 2019? In terms of paying tax in the United Kingdom, Google paid just £44 million in corporation tax last year.
Jul 11, 2019 · From April 2020, the government will introduce a new 2% tax on the revenues of search engines, social media platforms and online marketplaces which derive value from UK users.
- Large multi-national enterprises with revenue derived from the provision of a social media platform, a search engine or an online marketplace (‘in...
- The application of the current corporate tax rules to businesses operating in the digital economy has led to a misalignment between the place where...
- The announcement of the Digital Services Tax in Budget 2018 was followed by a consultation which closed in February 2019.
- Operative dateThe Digital Services Tax will apply to revenue earned from 1 April 2020.Current lawThis is new legislation and there is no current la...
- The measure will be monitored through information collected from receipts.
- If you have any questions about this change, contact the Digital Services Tax team by email: dst.mailbox@hmrc.gov.uk.
Mar 11, 2020 · From 1 April 2020, the government will introduce a new 2% tax on the revenues of search engines, social media services and online marketplaces which derive value from UK users.
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May 17, 2024 · Are you a social media influencer or content creator that receives gifts or get paid for posts? We explain how this affects your tax bill.
