- Draft Finance Bill 2019–2020—Digital services tax
- At Budget 2018 the UK government announced that it would be introducing a digital sales tax (DST) with effect from April 2020, and a consultation on the design and implementation of this new tax ran until 28 February 2019. We have now had draft legislation published for Finance Bill 2019-2020 confirming the design of the new rules. As a reminder, what is the background to this measure?
- Who will be affected by the new tax and how will it work?
- Were there any notable changes in approach from that set out in the design and implementation consultation?
- How will administration of the DST work?
- Are there any areas in which you foresee particular difficulties?
- Draft guidance was published alongside the draft legislation. How helpful is that guidance?
- What steps should in-scope businesses take now?
- The government has confirmed its commitment to agreeing and implementing a global solution for the effective taxation of large digital businesses, and has been clear that the DST is a temporary solution only. How do you see things progressing at the international level?
- The French DST, approved by the French Senate on 11 July 2019, received public condemnation from the White House for unfairly targeting US-based companies, and the White House has initiated an investigation which could ultimately result in retaliatory tariffs being imposed on French imports to the US, or other steps being taken. Might this move by the US in relation to the French DST have an impact on the UK’s DST?
Tax analysis: Following the publication of draft legislation for the Digital Services Tax in Finance Bill 2019–2020, David Klass, partner on the tax and ERISA team in Hunton Andrews Kurth’s London office, explains how the new tax would work in practice and identifies some of the complexities surrounding its implementation.
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