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Background to DST

The Government announced at Budget 2018 that a DST would be introduced which seeks to match the amount of tax paid in the UK by digital businesses to the value derived from UK users. Legislation is included in FA 2020 and HMRC has issued a Digital Services Tax Manual. DST applies to groups that provide a digital services activity.

It is anticipated that DST will be repealed in 2023 and replaced by a multilateral tax of a similar nature. See below at ‘DST ― international aspects’ for further details.

For more detail see Simon’s Taxes D2.801.

Overview of DST

From 1 April 2020, a DST of 2% applies to revenues which are attributable to UK users and arise from digital services activities that fall into the following three categories:

1. •

   a social media service

2. •

   an internet search engine

3. •

   an online marketplace

FA 2020, ss 43, 47

These three activities also include any associated online advertising business in relation to the activities; meaning a business which facilitates online advertising and also derives significant