Source · Select Committees · Public Accounts Committee
Recommendation 7
7
Acknowledged
HMRC did not take the view that the tax was significant enough to have a...
Conclusion
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
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.