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Digital Technology: Taxation

Question for Treasury

UIN 84235, tabled on 2 September 2020

To ask the Chancellor of the Exchequer, pursuant to the Answer of 23 July 2020 to Question 76028, what the evidential basis was for the estimated increase in revenue from the Digital Services Tax from £390 million in 2020-2021 to £510 million in 2024-2025.

Answered on

10 September 2020

The revenue is estimated to increase from +£280 million in 2020-2021 to +£510 million in 2024-2025.

The tax base used to make this estimate consisted of all revenues attributable to specific digital business activities, where those revenues were linked to the participation of UK users.

The tax base was established by collecting data on the revenues generated by the specific digital business activities in scope of the measure. The tax base was then projected over the scorecard period using a combination of the historical UK revenue growth of groups in scope and the Office for Budget Responsibility’s (OBR) non-North Sea gross trading profits determinant.

The costing was estimated by applying the policy regime to the tax base described, taking into account the potential behavioural responses of groups to this measure.

Answered by

Treasury