Source · Select Committees · Public Accounts Committee
Recommendation 9
9
Acknowledged
The Digital Services Tax is intended to fill the gap until the implementation of Pillar...
Conclusion
The Digital Services Tax is intended to fill the gap until the implementation of Pillar One, albeit as a ‘second-best’ solution.23 Other countries have also introduced a Digital Services Tax, including France, Italy, Spain and Austria.24 HM Treasury told us that this reflected the widespread feeling among members of the OECD that taxing the digital economy was “unfinished business.”25 The administrative approaches—such as the scope and frequency of returns—vary, as do the rates charged, which increases compliance costs for businesses. Stakeholders told the NAO that they viewed the UK’s approach to implementing the tax favourably compared to some other countries.26 The United States, home to many of the businesses most affected, has opposed these taxes and threatened sanctions in response.27
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.