Are we edging closer to enacted UK DST legislation?

Are we edging closer to enacted UK DST legislation?

On 2 July 2020, the House of Commons passed Finance Bill 2020 containing the UK Digital Services Tax legislation (effective 1 April 2020).


Partner, Deal Advisory Tax, Corporates Lead

KPMG in the UK


Also on

The UK edged one step closer to enacting its Digital Services Tax (DST) legislation when the House of Commons passed Finance Bill 2020 on 2 July 2020.

Despite the UK’s DST provisions commencing on 1 April 2020, the legislation bringing the rules into effect is still making its way through Parliament. Having passed through the House of Commons, the next steps for Finance Bill 2020 are the second reading and remaining stages in the House of Lords scheduled for 17 July 2020.

To recap, the DST is a tax of two percent on revenue on certain digital income streams connected to UK users, with effect from 1 April 2020. It is calculated based on relevant revenue as recognised in the financial statements and only applies to a global group that exceeds the following thresholds in a 12 month period:

  • £500 million of worldwide revenue from digital services activities; and
  • £25 million of these revenues attributable to UK users (UK digital services revenues).

The legislation contains a requirement for the Government to review the DST in 2025 and provide a revenue assessment of its impact. Proposals that would require the Government to report annually on the DST and include in the annual report an assessment of its revenue effect were ultimately voted down in the House of Commons.

The UK’s DST is still expected to be a temporary measure, pending an international consensus on the OECD’s work into the taxation of the digitalised economy (or BEPS 2.0).

The legislation’s progress is against the backdrop of an increasingly challenging picture at the global level. An article in our previous edition of Tax Matters Digest set out the US’ section 301 investigation into the UK DST and the US’ response to the OECD’s work into Pillar one and Pillar two.

On the same day that the UK House of Commons passed the UK DST legislation, the OECD’s Inclusive Framework concluded its two-day meeting. Following the meeting, the OECD emphasised the importance of avoiding tax and trade wars in a slumping global economy and called on countries to work together on Pillar one, which has proven to be the more controversial aspect of the OECD’s two pillar approach.

The Inclusive Framework is scheduled to meet next in October. The Inclusive Framework was previously tasked with reaching a consensus-based solution by the end of 2021, and the aim remains to at least partly reach an agreement in October to have a comprehensive solution ready as soon as possible. A multilateral solution is viewed as important to stop the spread of unilateral actions.

For further information please contact:

© 2021 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organisation please visit

Connect with us


Want to do business with KPMG?


loading image Request for proposal

Save, Curate and Share

Save what resonates, curate a library of information, and share content with your network of contacts.

Sign up today