American tech giants Amazon, Google and Apple have paid a total of £360m to U. K’s digital services tax in its first year.
According to a report by National Audit Office (NAO), digital services tax registered 30per cent more than the government had projected in 2021
Introduced in April 2020, the digital services tax imposes a two per cent charge “on the gross revenues made by digital titans running search engines, social media services and online marketplaces.”
Gareth Davies, the head of the NAO, said: “The digital services tax has succeeded in raising more tax from some big digital companies and has brought in more money than forecast in its first year.” Davies added that “U.K authorities have not identified any firms failing to comply with the new tax… but HMRC could still face challenges enforcing compliance, especially among groups without a physical presence in the UK”.
The tax, Mark Sweney reports, “is levied on gross revenues from digital advertising sales, and e-commerce sales companies including Amazon, Apple and eBay make from third party sellers on their sites but does not capture direct online sales to consumers from retailers such as John Lewis and Tesco.”
As Sweney underscores, tech giants such as Amazon, Google and Meta-owned Facebook have historically paid relatively little corporation tax in the UK because, he writes, “they typically ensure their British operations make very little profit, instead funneling earnings through low-tax jurisdictions such as Luxembourg and Ireland.”