Recommendation 7

HMRC did not take the view that the tax was significant enough to have a noticeable additional burden on businesses. However, evidence submitted to us by one travel business complained of the greater impact on those operating high-volume, low-margin businesses.18 HMRC also acknowledged that a business will be taxed twice – on the revenues received from UK users (through the Digital Services Tax) and on the profits derived from that revenue (through Corporation Tax, either in the UK or elsewhere).19 Payers of the tax can, and are, passing the cost on to users.20 10 Q 36 11 Office for Budget Responsibility, Economic and fiscal outlook, 17 November 2022, table A.6 12 Q 54 13 Q 55 14 Qq 5, 20, 45, 92 15 C&AG’s Report, para 1.9 16 Qq 12, 13, 17 17 Qq 14, 82 18 Q 90 19 Qq 24, 25 20 Qq 30, 64, C&AG’s Report, para 1.11 10 The Digital Services Tax 2 The OECD Pillar One and Pillar Two reforms The nature of the reforms