The UK’s Digital Services Tax is now in effect and new compliance guidance has been issued by HMRC.
New guidance issued by HMRC, as well as the opening of their online Digital Services Tax (DST) registration portal, underlines that DST is now in effect. This will have an impact on all relevant digital transactions from 1 April 2020. There are a number of factors to consider, including commercial decisions around the cost of the tax, accurate tracking of data, and reporting and compliance considerations.
Our recent article outlined the key features of the UK’s Digital Services Tax (DST). This applies to impacted revenues related to UK users from 1 April 2020.
HMRC have now opened the online portal to allow companies to register for the tax, and have also released guidance on a number of compliance issues related to the tax, including:
Whilst a number of these compliance and payment deadlines are still some way in the future, our experience is that groups may find it challenging to accurately track and report in-scope revenues to the level of detail required (particularly where taxpayers expect to make use of one or more of the available reliefs, e.g. the low margin exemption or the cross-border transaction relief for online marketplaces). A number of taxpayers are also considering the impact the tax may have on commercial decisions such as pricing. These aspects of the DST should be considered as a matter of urgency for potentially impacted groups.
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