UK seals deal to end Digital Services Tax and transition to global system

The UK has agreed to scrap its Digital Services Tax on online giants like Amazon in a move that will stop Joe Biden slapping tariffs on British goods.

An agreement was struck with the EU and US yesterday on how to transition from the Digital Services Tax to a new global system agreed by G20 countries earlier this year.

“Following the landmark deal achieved earlier this month, I am delighted we have agreed a way forward on how we transition from our Digital Services Tax to the newly agreed global tax system,” Rishi Sunak said.

“This agreement means that our Digital Services Tax is protected as we move to 2023, so its revenue can continue to fund vital public services.”

The Digital Services Tax sees some online giants hit with a 2 per cent tax on their gross revenue.

The tax infuriated the US when it was implemented, with Donald Trump and then Joe Biden threatening to slap tariffs on British goods if it was not scrapped.

The new global tax deal aims to stop the world’s richest firms avoiding their tax bills, with a particular focus on Silicon Valley giants.

Under Sunak’s transition deal, companies who pay the Digital Services Tax after January 2022 will be credited against future corporation tax bills if they pay more than what they would be under the new global tax deal.