Recommendation 10

Pillar One’s scope will differ from that of the Digital Services Tax. First, it will be a tax on profits rather than revenues. Second, it will apply to a much broader range of activities as it is not simply aimed at online business groups. However, unlike the Digital Services Tax, it will cover online sales. Requirements for global turnover of more than €20 billion and profits exceeding 10% of turnover will effectively limit coverage to around 100 of the world’s largest and most profitable businesses.28 More businesses will pay Pillar One because the tax is scoped more widely than the Digital Services Tax, but it is also likely that some businesses paying Digital Services Tax will not pay Pillar One. HM Treasury and HMRC do not think that experience with the Digital Services Tax will help with the implementation of Pillar One due to likely differences in the design, not least that Pillar 21 C&AG’s Report, para 1.4 22 C&AG’s Report, para 1.12 23 Qq 5, 46 24 Q 94 25 Q 16 26 Qq 12, 96 ; C&AG’s Report, paras 1.7, 3.6 27 Qq 14, 82 28 C&AG’s Report, para 1.13 The Digital Services Tax 11 One will be a tax on profits.29 This is despite HMRC explaining to us that the introduction of the Digital Services Tax provided the opportunity to work closely with a group of likely future Pillar One taxpayers.30