Following a recent agreement with the United States, the prime minister confirmed ongoing discussions regarding digital services.
The UK’s Digital Services Tax (DST), a 2% levy generating approximately £800 million annually, primarily from US tech companies, was widely believed to be a key component of US-UK trade negotiations. Previous reports suggested its inclusion in trade talks.
The government declared on Thursday that the DST remains unchanged following the newly announced US-UK deal that reduces tariffs on goods such as cars and metals, previously imposed by President Trump.
When questioned about potential DST modifications, the opposition leader stated, “Concerning digital services, discussions are ongoing, alongside other aspects of the agreement.”
Speaking to reporters aboard HMS St Albans during a visit to Norway, the opposition leader emphasized the deal’s primary focus on steel, aluminum, and automotive tariffs. He added that ongoing discussions about digital services are taking place alongside other aspects of the deal, but the key focus was on protecting sectors previously vulnerable to tariffs.
While the new agreement offers relief to industries impacted by Trump-era tariffs, wider UK-US trade negotiations continue. A significant point of contention has been the DST, affecting large multinational corporations operating social media platforms, search engines, or online marketplaces within the UK.
This 2% tax targets companies with global revenues exceeding £500 million and UK revenues exceeding £25 million, impacting tech giants such as Amazon and Meta. Introduced in 2020 by the previous Conservative government, the DST has faced opposition from President Trump, who viewed it as unfairly targeting American businesses.
The Chancellor previously emphasized the need for a balanced approach in negotiations with the US, stating the importance of ensuring UK-based companies pay their fair share of taxes while preserving free and open trade.
Potential DST alterations have drawn criticism from the Liberal Democrats, who warned against compromising on this tax. However, the Trade Minister assured Parliament that the government carefully considered concerns about weakening online safety protections during trade negotiations, prioritizing the UK’s national interest.
Commenting on the deal, a Conservative leader described it as “better than nothing but not much,” expressing concerns about the potential lack of a comprehensive free trade agreement.
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