VAT News

Digital Services Tax 1st April 2020


Not strictly within the VAT realm but it’s always worth a reminder when the system brings forward a new tax especially when it arrives in the middle of such a “turbulent” period.

The new Digital Services Tax came into existence on the 1st April 2020 and is a tax targeted at large social media platforms, search engines and online marketplaces – you can probably guess who!

The tax is calculated on the revenue generated from UK Users of those platforms and is set at 2% of that revenue. A “UK User” is either an individual located in the UK or a business established in the UK and no doubt issues will arise on identifying where the person/ business is located for these purposes.

Digital Services Tax will apply to revenue earned from 1 April 2020.

 Who should register and account for this new tax:

 Any business that provides a social media platform, search engine or online marketplace to UK users and these digital services activities generate:

  • global revenues of more than £500 million in a year
  • UK revenues of more than £25 million in a year

 For background reading on the new tax there are guidance notes to be found here

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