Digital Services Tax

Public Accounts Committee Closed Inquiry
Opened: 31 Oct 2022 Closed: 27 Jun 2023 Parliament page
In April 2020 HM Revenue & Customs (HMRC) introduced the Digital Services Tax, a 2% tax on the revenues of search engines, social media platforms and online marketplaces which derive value from UK users. The government expects to remove this tax when international reforms proposed by the Organisation for Economic … Read more
4 Recommendations
16 Conclusions
1 Report
1 Oral session
2 Letters
1 Event
Activity timeline 5 events
27 Jun
2023
Report published
27 Jun
2023
Correspondence
5 Apr
2023
Report published
12 Jan
2023
Correspondence
8 Dec
2022
Oral evidence
Oral evidence sessions 1 session
8 Dec 2022
View on parliament.uk
Digital Services Tax
Jim Harra · HMRC Jon Sherman · HMRC Mike Williams · HM Treasury
Title HC No. Published Items Response
Forty-Fourth Report - The Digital Services Tax HC 732 5 Apr 2023 20 Responded
Recommendations & Conclusions
9 results
Clear
2 Recommendation Accepted
Forty-Fourth Report - The Digital …
HMRC implemented the Digital Services Tax with little cost, and the experience could provide valuable...
HMRC implemented the Digital Services Tax with little cost, and the experience could provide valuable lessons for other new taxes. HMRC implemented the tax on schedule for only £6.3 million, less than budgeted, though there will be ongoing compliance costs. … Read more
Government Response
The government agrees and says HMRC carries out an evaluation on the implementation of all measures that require new or updated systems and processes, and that they have since implemented other taxes learning lessons from the design and implementation of DST.
HM Treasury
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4 Recommendation Accepted
Forty-Fourth Report - The Digital …
HM Treasury and HMRC have a vital role in ensuring that the multilateral assurance framework...
HM Treasury and HMRC have a vital role in ensuring that the multilateral assurance framework for Pillar One of the OECD reforms will meet Parliament’s desire for accountability and transparency. The 140 jurisdictions involved in the development and implementation of … Read more
Government Response
The government agrees and will write to the committee with the UK's objectives for the multilateral administrative framework, including audit arrangements and states that the forecasted revenues for Amount A will be published in the usual way after OBR scrutiny, at a future fiscal event.
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11 Conclusion Accepted
Forty-Fourth Report - The Digital …
It is unclear how the receipts from Pillar One will compare to the Digital Services...
It is unclear how the receipts from Pillar One will compare to the Digital Services Tax as HMRC has not yet modelled the likely receipts from businesses liable to pay Pillar One, prior to agreement being reached on how profits … Read more
Government Response
The government agrees with the conclusion and commits to publishing forecasted Pillar One revenues at a future fiscal event after OBR scrutiny, while noting that Pillar Two revenue estimates were already published at Budget 2023.
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13 Conclusion Accepted
Forty-Fourth Report - The Digital …
Legislative decisions, implementation decisions and the operation of compliance regimes for Pillars One and Two...
Legislative decisions, implementation decisions and the operation of compliance regimes for Pillars One and Two will be carried out in line with agreed conventions. As previously stated, the OECD’s Pillar One is due to supersede the Digital Services Tax in … Read more
Government Response
The government agrees, committing to implement Pillar One and repeal DST, and details enhanced plans for DST compliance, including identifying non-cooperating groups and increasing awareness, to be completed in 2023 in case Pillar One is delayed.
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14 Conclusion Accepted
Forty-Fourth Report - The Digital …
The Chartered Institute of Taxation describes the Digital Services Tax as a ‘blunt instrument’.43 There...
The Chartered Institute of Taxation describes the Digital Services Tax as a ‘blunt instrument’.43 There are aspects of the tax’s design that are tolerable in the short-term but would need to be addressed if its life was to be extended … Read more
Government Response
The government agrees that HMRC has already completed an evaluation of DST implementation, applying lessons learned to other tax policy changes, and reiterates that DST is an interim solution whose impact is under constant review.
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17 Conclusion Accepted
Forty-Fourth Report - The Digital …
HMRC and HM Treasury said that they have not seen any evidence of tax avoidance...
HMRC and HM Treasury said that they have not seen any evidence of tax avoidance so far, for example by changing business models, as businesses have not regarded it as worth their while. But they assured us that they are … Read more
Government Response
The government agrees and is committed to implementing Pillar One while monitoring Digital Services Tax. HMRC is enhancing its plans to identify groups within DST scope, increase business awareness, and address risks from non-UK presence, with these plans due for completion by the end of 2023.
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18 Conclusion Accepted
Forty-Fourth Report - The Digital …
As stated above, HMRC has not yet faced the situation where an overseas-based business refuses...
As stated above, HMRC has not yet faced the situation where an overseas-based business refuses to pay the correct amount of tax as assessed by HMRC. HMRC told us that it has bilateral and multilateral agreements with other countries that … Read more
Government Response
The government agrees and reiterates its commitment to Pillar One implementation. HMRC's dedicated DST compliance team is enhancing plans to identify groups, increase awareness, and address non-cooperation risks, with these plans due for completion in 2023.
HM Treasury
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19 Conclusion Accepted
Forty-Fourth Report - The Digital …
Pillar One will operate within a multilateral administrative framework, with the emphasis on international cooperation.
Pillar One will operate within a multilateral administrative framework, with the emphasis on international cooperation. This will be very different to how HMRC currently ensures compliance with its tax regime.58 Getting 140 tax jurisdictions to agree on a framework for … Read more
Government Response
The government agrees with the observation and commits to providing the committee with the UK's objectives for the multilateral administrative framework, including audit arrangements, by June 2023.
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20 Conclusion Accepted
Forty-Fourth Report - The Digital …
There is a delicate line to tread between accountability, transparency and the maintenance of taxpayer...
There is a delicate line to tread between accountability, transparency and the maintenance of taxpayer confidentiality. The Digital Services Tax illustrates how difficult it is to talk about these issues in a way that protects confidentiality when you are dealing … Read more
Government Response
The government agrees, committing to normal Parliamentary scrutiny for Pillar One and Two, and to publish forecasted revenues for Pillar One (Amount A) at a future fiscal event, addressing the importance of transparency.
HM Treasury
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Government Response AI assessment · 19 of 4 classified
Accepted 9
Acknowledged 7
Not Addressed 2
Rejected 1
Total 4 recs + 16 conclusions
Correspondence 2 letters
27 Jun 2023 Joint correspondence from Beth Russell, Second Permanent Secretary, HM Treasury, and Jim Harra, Chief Executive and First Permanent Secretary, HM Revenue & Customs, re Forty-Fourth Report of Session 2022-23 – Digital Services Tax, dated Forty-Fourth Report of Session 2022-23 – Digital Services Tax
Parliament page
12 Jan 2023 Correspondence from Victoria Atkins MP, Financial Secretary to the Treasury, re update on Making Tax Digital, dated 19 December 2022
Parliament page