The document discusses the digital services tax (DST) implemented in the United Kingdom in April 2020. It levies a 2% tax on revenues from digital services for large tech companies with over £500 million in global annual revenues. While intended to make large digital companies pay more tax, critics argue it will be passed on to consumers and smaller third-party sellers. The U.S. has threatened retaliation through tariffs on certain imports, citing discrimination against U.S. tech companies.

1. Digital Services Tax
in the United Kingdom
Presentation by Adrian Milosevic

2. Table of contents
1. Digital Services Tax overview
2. Will it make big digital companies pay more tax?
3. Potential U.S. retaliation
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3. Digital Services Tax overview
• European Commission proposed a temporary
DST in 2018
• 3% on revenues of online advertising services
• Income from digital intermediary activities
• Sales of user-collected data
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4. • Initial proposal was rejected at
EU level
• Several EU and non-EU
countries have modeled their
own DST
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5. 1.5
2
3 3 3
5
7.5 7.5
0
1
2
3
4
5
6
7
8
Poland United Kingdom France Italy Spain Austria Hungary Turkey
Implemented DSTs in Europe, April 2021
Tax Rate in %
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6. 750 750
285
750
0
750 750
525
25 25 0 5.5 0 3 2 30
0
100
200
300
400
500
600
700
800
Austria France Hungary Italy Poland Spain Turkey United Kingdom
Revenue Threshold in € million
Global Revenue Threshold Domestic Revenue Threshold
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7. DST in the United Kingdom
• Implemented as of 1st of April 2020
• 2% tax on VAT-exclusive revenues
• Social media service, search engine or online
marketplace
• Global revenues over £500m and more than
£25m attributable to UK
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8. Will it make big digital companies pay more tax?
• Amazon paid no corporation tax in Europe last
year
• €44bn in sales but overall a €1.2bn loss
• 2% tax will be passed on to third-party sellers
on Amazon
• Tax is being levied on the service fees
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9. • Amazon is getting a price advantage on third-party sellers
• Google advertising clients will pay additional fee
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10. Potential U.S. retaliation
• 10th of July 2019 USTR initiated an
investigation of France’s DST
• France’s DST was unreasonable or
discriminatory and restricts US commerce
• 25% tariff on certain French-origin luxury
products as of 6th of January 2021
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11. • 5th of June 2020 initiation of Section 301
investigation
• DSTs unfairly discriminate against U.S.
companies
• 2nd of June 2021 additional tariffs at a rate of
25% on certain goods
• Tariffs are being suspended for up to 180 days
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12. Thank you for listening!
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13. Sources
• https://taxfoundation.org/digital-tax-europe-2020/
• https://news.bloombergtax.com/daily-tax-report/digital-services-tax-why-
the-world-is-watching
• https://www.nortonrosefulbright.com/en/knowledge/publications/24da19c2
/the-uks-digital-services-tax-whats-new
• https://www.theguardian.com/technology/2020/oct/14/amazon-to-escape-
uk-digital-services-tax-that-will-hit-smaller-traders
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14. • https://www.theguardian.com/technology/2021/may/04/amazon-sales-
income-europe-corporation-tax-luxembourg
• https://home.kpmg/us/en/home/insights/2021/06/tnf-united-states-
suspends-tariffs-goods-six-countries-digital-services-tax-investigations.html
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