What is Digital Services Tax (DST)?

Full Definition

Digital Services Tax (DST) is a UK tax introduced on 1 April 2020 that applies to the UK revenues of large digital businesses. The tax is charged at 2% on the revenues that UK users generate for in-scope digital service providers. The three categories of in-scope services are: social media platforms (advertising revenues generated from a social media service with UK users); internet search engines (advertising revenues generated from searches made by UK users); and online marketplaces (revenues generated from facilitating transactions between UK users, including marketplace transaction fees and related advertising). DST applies only to groups with global revenues from in-scope digital services exceeding GBP 500 million in a year and UK revenues from those services exceeding GBP 25 million. There is an allowance of GBP 25 million, so only UK revenues above that threshold are subject to the 2% rate. DST is an interim measure introduced while international negotiations on a global solution for taxing the digital economy were ongoing through the OECD/G20 Inclusive Framework. It operates separately from Corporation Tax and is not deductible for Corporation Tax purposes. DST is not a value added tax -- it is charged on the revenue of the platform, not on consumers directly. HMRC administers DST and groups must register and file annual returns.

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