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A temporary fix

22 March 2019

The government’s digital services tax on digital companies should be a temporary measure and ideally last no more than five years, says the Chartered Institute of Taxation.

The Institute wants the DST repealed as soon as there is a multilateral agreement through the OECD on a global method to tax such companies on the value created by users.

The CIOT’s Glyn Fullelove said given the nature of the tax a pragmatic approach is required in order for it to be implemented effectively. “This is because revenue taxes such as this are a blunt instrument that cannot accurately represent the tax on the profits related to user based value on all businesses on which it is imposed, ” he explained. That means inevitably some companies will be over-taxed and others under-taxed!

Fullelove explained many companies will not have the necessary information to arrive at a precise answer to how much DST they should pay. So in practice the government will have to rely on companies to arrive at a ‘best estimate’ of the amount of the DST payable based on a just and reasonable estimate of the UK revenues liable to DST.

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