Commentary

D2.804 Calculating the charge to digital services tax

Corporate tax
Corporate tax | Commentary

D2.804 Calculating the charge to digital services tax

Corporate tax | Commentary

D2.804 Calculating the charge to digital services tax

Digital services tax (DST) is a 2% tax on the revenues of digital services activities 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. For details of the definition of digital services activities see D2.802 and for UK users definition see D2.803. For details of what revenues fall within the DST regime as being attributable to UK users see D2.801.

Threshold conditions for DST

There are threshold conditions which limit those businesses impacted by DST to only those with the largest revenue base from digital activities. In a 12 month accounting period a group must have both digital services revenues of over £500m and UK digital services revenues of over £25m to breach the DST thresholds — both thresholds must be breached. These thresholds are group wide and so all digital services revenues of all group members must be summed. The threshold conditions are proportionately reduced for shorter accounting periods1.

It is notable that the threshold conditions are by reference to digital services revenues and not all revenues. Large businesses with only certain business areas falling to be treated as digital services may therefore escape the charge — only the very largest businesses with also a very large revenue base from digital activities will breach the conditions.

Where a business does breach the thresholds then DST

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