The Digital Services Tax (DST) has now come into effect, but the Chartered Institute of Taxation has said there are questions remaining about who will pay it and how much they will need to pay.
The detailed provisions implementing the DST are in the Finance Bill, which is passing through the UK Parliament.
Glyn Fullelove, President of the CIOT, explained, “More clarity and greater understanding about DST is needed.
“There is welcome detail in the Finance Bill aimed at assisting how to calculate revenues attributed to UK users but businesses will still face significant practical difficulties in identifying the relevant components of what is within the charge to tax. There is continued uncertainty around online gambling and gaming platforms and it is not easy to see whether these are in or out of scope.
“The general public is broadly behind the DST. Many online companies are perceived to be doing well as more business is directed online due to COVID-19 restrictions on movement. However, DST is not aimed at protecting the high street from competition from on-line retailers. Nor is it aimed at stopping profits arising in the UK being shifted by multinationals out of the UK to tax havens, as some recent reports have said. Instead it creates a new taxing right on revenues, as a proxy for (and in lieu of global agreement for) allocating profits to be taxed in the UK which have never been previously subject to tax here. Existing internationally agreed rules allocate profits only to where physical activities are undertaken. Moreover, by the Government’s own estimates it is unlikely to raise amounts that materially affect the country’s finances, particularly in the context of the amounts being spent on COVID-19 measures.”