Business Design Tips

UK Looking To Raise £500m Annually Via Digital Services Tax

Britain’s government is moving forward with their plans for a new digital services tax that’ll affect things like King Kong SEO, aimed primarily at large US technology companies. The government is pressing ahead with these plans in spite of the complaints by UK-based saying that they might be jeopardized.

The levy is set to be implemented in April 2020 following its inclusion early in March 2020, and is aimed at the hundreds of millions of pounds that critics say Silicon Valley companies manage to avoid paying by having their profits to low-tax territories, like Ireland.

The British tech companies, however, highlighted how the new digital services taxes covers more than just big search engines, and social networks like Google and Facebook, and include the ecommerce groups in the UK.

The British government aims to raise £500m annually from this new digital service tax. The tax, however, has met notable opposition, not just from tech companies who have pushed back, but from the Trump administration, which threatened tariffs on the UK’s car exports if the Johnson government moves forward with the levy. This, in turn, could make it harder for Britain and the UK to go into agreement regarding a post-Brexit trade deal.

UK-based tech companies have concerns regarding the risk of double taxation, as the EU competition rules, still in apply until the end of the Brexit transition period at the end of 2020, doesn’t let UK companies from offsetting the digital levy against others. A report even stated that levy would put UK tech companies at a competitive disadvantage.

The measure, which will affect company that global revenues of more than £500m and £25m of UK sales and digital services, like King Kong SEO, and is aimed at making sure that any sort of online transaction, like advertising, are taxed where the customers or the users themselves live.

Notably, this isn’t the only such initiative, and to secure more taxes from US tech companies, with other countries opting for such measures, in spite of the efforts of the Paris-based Organisation for Economic Co-operation and Development (OECD), who have been looking to make global rules for digital taxation.