Digital Services Tax (DST)
A Digital Services Tax is a tax on the revenue, not the profit, of large digital platforms earning money from users in a particular country, used as an interim measure while OECD-level reform stalls. The UK's DST, introduced in April 2020 at 2%, applies to groups with more than £500m in global digital revenue and more than £25m from UK users of search engines, social media and online marketplaces. It raised £808m in 2024-25 and is paid by just 18 taxpayers, a handful of whom account for most of the yield. DSTs are contested because they tax revenue rather than profit and can be passed to consumers, and they draw geopolitical pressure: the US has threatened trade tariffs against countries that keep them.
ByLoopholeKiln EditorialPublished
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Example: a small group of the largest global platforms generate most of the UK's DST receipts, paying a bespoke tax that exists for no other kind of business.
Why it matters to a small business: the DST does not apply to you; the £500m global-revenue threshold ensures only genuine giants are in scope. It is a sign of the underlying problem: ordinary rules fail to tax large digital firms, so governments build special taxes aimed only at them.