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4w ago

U.K. Signals Flexibility on Digital Services Tax as U.S. Tariffs Loom

With U.S. tariffs set to take effect on April 2, the U.K. government considers adjustments to its DST to address American concerns while facing domestic political resistance.

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US President Donald Trump and British Prime Minister Keir Starmer get on well but they're yet to strike a deal for the UK to avoid the President's trade tariffs (Photo by SAUL LOEB / AFP)

Overview

  • The U.K. government has indicated that the digital services tax (DST), introduced in 2020, could be adjusted to avoid U.S. retaliatory tariffs scheduled for April 2.
  • U.S. officials argue the DST unfairly targets American tech companies, prompting threats of broad tariffs that could impact the U.K. economy by up to 1% of GDP.
  • The DST generates approximately £800 million annually for the U.K. but has faced criticism from domestic political factions wary of potential revenue losses if it is altered.
  • Trade Secretary Jonathan Reynolds stated that the DST was never intended to be permanent and emphasized the need for an international agreement on digital taxation.
  • Negotiations between the U.K. and U.S. remain intensive, with both sides seeking to resolve trade disputes and broader tariff issues before the looming deadline.