The Digital Services Tax (DST) is a relatively easy bargaining chip to give away in a last-ditch bid to appease Donald Trump, whose final menu of tariffs on UK exports to the US is expected imminently. First tabled by Philip Hammond as chancellor in 2018 and enacted by his successor, Sajid Javid, two years later, this 2 per cent levy on tech multinationals with more than £25 million of UK digital revenues was always seen as a raid on the likes of Apple, Amazon, Netflix, Google, Meta and Microsoft, though it must by now also catch Shein and other Chinese operators – and was always a provocation to the White House.
Within months, there were rumours that Boris Johnson’s government was ready to scrap DST to secure a longed-for UK-US trade deal. Even now, it contributes only £800 million a year in revenue to HM Treasury, while total UK exports to the US exceed £180 billion. Chancellor Rachel Reeves and Ambassador Peter Mandelson have both let slip that it’s up for discussion. After all, why not curry a bit of favour by slipping the tech bros a handy rebate, some of which might even find its way into Republican midterm campaign coffers?
But the answer to ‘why not’ is one of simple principle. When DST was mooted in London, Brussels and elsewhere in the late 2010s, tech giants were collectively reckoned to be paying less than half the taxes they might have paid at ‘headline’ rates wherever they operated. In the EU, terrestrial businesses paid 23 per cent while digital players, shifting much of their profit to offshore havens, paid no more than 9 per cent.
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