Key measures impacting non-UK owned groups announced in the 29 October 2018 budget include the introduction of a 2% digital services tax as from April 2020, applicable to groups with global revenue from such activities exceeding £500 million a year and income generated in the UK exceeding £25 million.
The rules will include safe harbour provisions that reduce the effective rate of tax on businesses with very low profit margins. DST also will be an allowable expense for UK corporate tax purposes and it will not be creditable against corporation tax. The Chancellor made clear that the government would prefer a global tax framework on this matter, but in the interim, this measure will be introduced unilaterally. DST, therefore, is badged as a temporary measure and will cease to apply once a comprehensive global solution is in place.