Proposals for a Digital Services Tax in the draft Finance Bill

Commenting on the publication of the draft Finance Bill, which includes proposals to introduce a Digital Services Tax, techUK’s Associate Director for Policy, Giles Derrington, said:

“There is no doubt that the system for international taxation needs to evolve to deal with a digitising economy. To do that we need smart and innovative solutions developed at a global level. As a revenue tax targeted on a narrowly defined set of companies, the Digital Services Tax is not one of those smart measures. It risks making investing in the UK less attractive, increasing costs for consumers and will likely hinder progress towards a long term global solution.

“It is also deeply concerning that the UK Government has chosen to press ahead with this proposal after just today the US Government announced an investigation into France for a similar digital tax plan. The US Government has said that this proposal risks creating new non-tariff barriers to trade, and there is a real risk that the Government is putting the UK at risk of retaliation from the US Government that would hurt British businesses and consumers. The proposal runs resolutely counter to the visions for a Global Britain championing free trade.

“While we recognise that the proposals published today are a draft, there remain too many unanswered questions about how this tax will work in practise. At present, the tax could very likely lead to some bizarre outcomes, including increasing costs being passed onto consumers, dis-incentivising investment in R&D and reducing competition. It even risks creating an outcome where UK-based tech firms  actually end up paying more tax than their international competitors. It is hard to see how this would be beneficial for the UK economy or for consumers.”

 

For media inquiries, please contact Harri Turnbull.

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