D2.801 Digital services tax (DST)—background and scope
For the latest New Developments, see ND.2061, ND.2081.
Digital services tax (DST) was announced by the Government in the 2018 Budget and introduced in FA 2020, it took effect from 1 April 20201. It is a 2% tax on the revenues of search engines, social media platforms and online marketplaces which derive value from UK users when the group's worldwide revenues from these digital activities are more than £500m and more than £25m of these revenues are derived from UK users.
HMRC has issued guidance in the Digital Services Tax Manual starting at DST01000.
For many years now, the concept of a digital services tax has been discussed at a multinational level alongside the numerous ways in which Governments across the globe could look to tax digital businesses. The nexus of this debate begins with the release of the first paper related to Base Erosion and Profit Shifting ('BEPS') by the Organisation for Economic Cooperation and Development ('OECD'), titled Action 1: Addressing the Tax Challenges of the Digital Economy, released in October 2015. Initially parked in order to address other BEPS action items, the digital tax debate has become much more prevalent in recent years. While the UK Government remains committed to reaching a multinational consensus on the issues presented by the digital economy at OECD level, it was felt that interim unilateral measures were required to