Digital Services Tax
I share your view that companies should pay tax in the countries in which they operate, and that is why the UK introduced the Digital Services Tax (DST) in 2020. The 2% tax – levied on search engines, social media platforms, and online marketplaces – ensures that digital services providers pay their fair share of UK tax, reflecting the value they derive from UK users.
I know that the UK remains committed to working with other countries to reach a global solution to the taxation of the digital economy, as led by the G20 and the Organisation for Economic Co-operation and Development through their Inclusive Framework Project. The UK has already fully implemented ‘Pillar 2’ of that plan, which ensures that all multinationals are subject to a minimum rate of tax everywhere they operate.
As I understand it, the DST was designed to be an interim solution to widely held concerns with international corporate tax. The Government remains committed to and expects to remove this tax when international reforms proposed by the OECD are agreed and passed into law.
More broadly, I agree that the wealthiest in our society should pay their fair share of tax. There are several long-standing taxes on assets and wealth that generate substantial revenue for the Government, and I welcome that the tax changes announced at the Budget last year were underpinned by fairness. These include the reform of capital gains tax and inheritance tax, closing loopholes in the windfall tax on oil and gas companies, and abolishing the non-dom regime.
Forthcoming changes to our business rates system will also see large online companies such as Amazon paying higher business multiplier rates. From 2026-27, the Government will introduce permanently lower tax rates for hospitality properties, funded by introducing a higher multiplier on the most valuable properties, such as the large distribution warehouses used by online giants. The rates for these new multipliers will be set at Budget 2025.
The Government keeps all taxes under review as part of the usual tax policy-making process. I will continue to support taxation that is underpinned by fairness, while protecting working people, delivering economic stability, and investing in public services such as the NHS.