Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Acknowledged
The Digital Services Tax is an interim solution to meet a perceived a lack of...
Conclusion
The Digital Services Tax is an interim solution to meet a perceived a lack of ‘fairness’ in the current system, and is not on its own intended to deliver a ‘fair’ system, or to level the playing field between online retailers and the high street, although the additional receipts are obviously welcome.14 The Digital Services Tax is set at 2% of turnover for firms whose worldwide revenues from in-scope digital activities are more than £500 million, and who derive more than £25 million of revenue from UK users.15 The Departments told us that these criteria were a sensible compromise in order to avoid capturing smaller firms, using a rate broadly in line with that used in other countries’ Digital Services Taxes.16 Its design also reflected the opposition to the Digital Services Taxes by the United States, which is the headquarters for many of the largest business groups within scope of the tax.17
Government Response Summary
The government acknowledges the committee's conclusion, stating that the DST is a pragmatic interim solution focused on businesses for which the policy concern is most relevant and administrative burdens are considered manageable, and that tax policy is kept under constant review.
Government Response
Acknowledged
HM Government
Acknowledged
2.3 The government has always said that the optimal solution would be a multilateral solution on reallocation of taxing rights. However, pending a multilateral solution, the government decided to implement a pragmatic interim solution. In line with guidance agreed within the OECD, the DST is focused on the businesses for which the policy concern is considered most relevant and for which administrative burdens are considered most manageable. While the DST is an interim solution, the government keeps tax policy, including the impact of the DST, under constant review.