The 2% tax on US tech giants for UK revenues will remain in place as the countries work on a digital trade deal, the government said.
Former prime minister Boris Johnson’s government introduced the tax in 2020 on revenues of search engines, social media services and online marketplaces that make money from UK users.
The levy only applies to businesses making over £500m worldwide and £25m from UK users of these services. This includes US tech giants such as Meta, Google and Apple.
It is expected to raise £800m in revenues this year.
“The Digital Services Tax remains unchanged as part of today’s deal,” said the UK government statement announcing the agreement, “instead the two nations have agreed to work on a digital trade deal that will strip back paperwork for British firms trying to export to the US – opening the UK up to a huge market that will put rocket boosters on the UK economy.”
UK prime mininster Keir Starmer and US president Donald Trump announced the trade agreement yesterday, dropping tariffs on British cars to 10% and wiping out tariffs on steel and aluminium exports.
The Digital Services tax had been expected to be under threat in any agreement. The White House complained in February of “overseas extortion” of its tech firms.
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