UK Digital Services Tax raises £800M from global tech giants
(2025/11/28)
- Reference: 1764324015
- News link: https://www.theregister.co.uk/2025/11/28/uk_digital_services_tax/
- Source link:
The UK government collected just £800 million in Digital Services Tax (DST) from companies such as Amazon, Google, Meta, eBay, and TikTok in the most recent tax year.
Introduced in 2020, the tax is designed to apply to multinational enterprises with revenue derived from the provision of a social media service, a search engine, or an online marketplace to UK users.
Tech giants looking for ways to wriggle out of UK digital tax, watchdog warns [1]READ MORE
It was created to replace previous corporate tax rules for businesses operating in the digital economy, which led to a "misalignment between the place where profits are taxed and the place where value is created."
"Many of these digital businesses derive value from their interaction and engagement with a user base," the government said at the time.
A quick sweep of UK revenue from online giants shows the scale of the challenge. Amazon, for example, [2]generates around £29 billion (2024) in UK sales. Google's total UK revenue from search alone is [3]estimated at around £15 billion , gained from its 90 percent share in the search market. Facebook's UK revenue is [4]estimated at around £3.1 billion .
[5]
The DST introduces a 2 percent tax on in-scope revenue. A crude estimate of the above figures alone would suggest a tax revenue of more than £900 million, but not all of these companies' UK revenue is taxable.
[6]
[7]
"For large groups that may have revenues in other activities, the DST only applies to... search engine, social media, and online marketplace revenues that generate over £500 million in global revenues from those activities and where more than £25 million of that is from UK user-related activities," a Treasury official told The Register .
A spokesperson said that reforming the international tax framework would create the most sustainable long-term solution to the problem and the UK is committed to maintaining that mission – which is led by the Organisation for Economic Co-operation and Development (OECD). The DST was an interim measure to ensure that digital businesses contribute to UK tax receipts in the meantime.
UK taxman spent six times more with AWS last year than cloud firm paid in corporation tax [8]READ MORE
Figures released when the DST was introduced [9]show that the £800 million raised in 2024-25 is actually ahead of the £515 million projected. [10]Projections from the Office for Budget Responsibility [PDF] say the DST will collect £1.4 billion in 2030-31 and raise £7.3 billion over the next six years.
Paul Monaghan, chief executive of The Fair Tax Foundation nonprofit, said the DST was "clumsy but needed."
[11]
"We support it, and we're glad they are keeping it," he told The Register . He pointed out that not all of Amazon's UK revenue is eligible for the tax, and equivalent economic activity in the banking and energy sectors was taxed at a higher rate.
Still, he hoped more would be raised under the DST in the future, and that the government could see the argument for increasing the rate and reviewing the taxation of digital services companies more broadly.
"As the digital services economy is growing, it is not just US companies but Chinese companies such as Shein and Temu and TikTok," Monaghan said. "It will keep bringing more revenue. There is an argument that there should be more discussion of the tax contribution [from digital services] across the piece. We need to look at corporation tax, DST, and other taxes, and take a drains-up approach."
[12]US taxpayers being kept in the dark over datacenter subsidies
[13]Altman sticks a different hand out, wants tax credits instead of gov loans
[14]UK tax collector falls short on digital efficiency, watchdog says
[15]Faced with £40B budget hole, UK public sector commits £9B to Microsoft
[16]From PAYE to P45: HMRC staff fired for prying into taxpayer data
Caitlin Boswell, head of advocacy and policy at Tax Justice UK, said: "Despite being under pressure to be axed from President Trump and Big Tech lobbyists, the Digital Services Tax appears to be being kept on the table as part of the Chancellor's Budget forecasting for the years ahead. This is good news given it is a vital source of revenue for the government, and a way of making sure some of the world's largest and richest digital companies pay their fair share on enormous revenues.
"With pressure remaining on government finances and the cost of living crisis squeezing millions of ordinary people, this tax should be strengthened to help invest in improving people's lives in Britain."
[17]
The government is in a bind between raising taxes, increasing borrowing, and cutting spending following Brexit, Covid, and years of austerity. Reg readers might hope global tech giants can take on a greater share of the burden in the future. ®
Get our [18]Tech Resources
[1] https://www.theregister.com/2023/04/05/uk_digital_services_tax_review/
[2] https://www.aboutamazon.co.uk/news/company-news/amazon-economic-impact-uk-tax-contributions-investments
[3] https://pressgazette.co.uk/marketing/google-meta-advertising-market-share/
[4] https://www.cityam.com/facebook-cuts-660-uk-jobs-as-revenue-nears-record/
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aSmAyG2OehbTn8EZkAUEzgAAAIU&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aSmAyG2OehbTn8EZkAUEzgAAAIU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aSmAyG2OehbTn8EZkAUEzgAAAIU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2019/06/11/aws_uk_tax_cloud/
[9] https://www.gov.uk/government/publications/introduction-of-the-digital-services-tax/digital-services-tax
[10] https://obr.uk/docs/dlm_uploads/OBR_Economic_and_fiscal_outlook_November_2025.pdf
[11] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aSmAyG2OehbTn8EZkAUEzgAAAIU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[12] https://www.theregister.com/2025/11/11/us_taxpayers_dc_subsidies/
[13] https://www.theregister.com/2025/11/10/altman_ai_tax_credit/
[14] https://www.theregister.com/2025/11/07/uk_tax_collector_falls_short/
[15] https://www.theregister.com/2025/08/07/uk_microsoft_spending/
[16] https://www.theregister.com/2025/08/18/hmrc_prying_staff_fired/
[17] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aSmAyG2OehbTn8EZkAUEzgAAAIU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[18] https://whitepapers.theregister.com/
Introduced in 2020, the tax is designed to apply to multinational enterprises with revenue derived from the provision of a social media service, a search engine, or an online marketplace to UK users.
Tech giants looking for ways to wriggle out of UK digital tax, watchdog warns [1]READ MORE
It was created to replace previous corporate tax rules for businesses operating in the digital economy, which led to a "misalignment between the place where profits are taxed and the place where value is created."
"Many of these digital businesses derive value from their interaction and engagement with a user base," the government said at the time.
A quick sweep of UK revenue from online giants shows the scale of the challenge. Amazon, for example, [2]generates around £29 billion (2024) in UK sales. Google's total UK revenue from search alone is [3]estimated at around £15 billion , gained from its 90 percent share in the search market. Facebook's UK revenue is [4]estimated at around £3.1 billion .
[5]
The DST introduces a 2 percent tax on in-scope revenue. A crude estimate of the above figures alone would suggest a tax revenue of more than £900 million, but not all of these companies' UK revenue is taxable.
[6]
[7]
"For large groups that may have revenues in other activities, the DST only applies to... search engine, social media, and online marketplace revenues that generate over £500 million in global revenues from those activities and where more than £25 million of that is from UK user-related activities," a Treasury official told The Register .
A spokesperson said that reforming the international tax framework would create the most sustainable long-term solution to the problem and the UK is committed to maintaining that mission – which is led by the Organisation for Economic Co-operation and Development (OECD). The DST was an interim measure to ensure that digital businesses contribute to UK tax receipts in the meantime.
UK taxman spent six times more with AWS last year than cloud firm paid in corporation tax [8]READ MORE
Figures released when the DST was introduced [9]show that the £800 million raised in 2024-25 is actually ahead of the £515 million projected. [10]Projections from the Office for Budget Responsibility [PDF] say the DST will collect £1.4 billion in 2030-31 and raise £7.3 billion over the next six years.
Paul Monaghan, chief executive of The Fair Tax Foundation nonprofit, said the DST was "clumsy but needed."
[11]
"We support it, and we're glad they are keeping it," he told The Register . He pointed out that not all of Amazon's UK revenue is eligible for the tax, and equivalent economic activity in the banking and energy sectors was taxed at a higher rate.
Still, he hoped more would be raised under the DST in the future, and that the government could see the argument for increasing the rate and reviewing the taxation of digital services companies more broadly.
"As the digital services economy is growing, it is not just US companies but Chinese companies such as Shein and Temu and TikTok," Monaghan said. "It will keep bringing more revenue. There is an argument that there should be more discussion of the tax contribution [from digital services] across the piece. We need to look at corporation tax, DST, and other taxes, and take a drains-up approach."
[12]US taxpayers being kept in the dark over datacenter subsidies
[13]Altman sticks a different hand out, wants tax credits instead of gov loans
[14]UK tax collector falls short on digital efficiency, watchdog says
[15]Faced with £40B budget hole, UK public sector commits £9B to Microsoft
[16]From PAYE to P45: HMRC staff fired for prying into taxpayer data
Caitlin Boswell, head of advocacy and policy at Tax Justice UK, said: "Despite being under pressure to be axed from President Trump and Big Tech lobbyists, the Digital Services Tax appears to be being kept on the table as part of the Chancellor's Budget forecasting for the years ahead. This is good news given it is a vital source of revenue for the government, and a way of making sure some of the world's largest and richest digital companies pay their fair share on enormous revenues.
"With pressure remaining on government finances and the cost of living crisis squeezing millions of ordinary people, this tax should be strengthened to help invest in improving people's lives in Britain."
[17]
The government is in a bind between raising taxes, increasing borrowing, and cutting spending following Brexit, Covid, and years of austerity. Reg readers might hope global tech giants can take on a greater share of the burden in the future. ®
Get our [18]Tech Resources
[1] https://www.theregister.com/2023/04/05/uk_digital_services_tax_review/
[2] https://www.aboutamazon.co.uk/news/company-news/amazon-economic-impact-uk-tax-contributions-investments
[3] https://pressgazette.co.uk/marketing/google-meta-advertising-market-share/
[4] https://www.cityam.com/facebook-cuts-660-uk-jobs-as-revenue-nears-record/
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aSmAyG2OehbTn8EZkAUEzgAAAIU&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aSmAyG2OehbTn8EZkAUEzgAAAIU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aSmAyG2OehbTn8EZkAUEzgAAAIU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2019/06/11/aws_uk_tax_cloud/
[9] https://www.gov.uk/government/publications/introduction-of-the-digital-services-tax/digital-services-tax
[10] https://obr.uk/docs/dlm_uploads/OBR_Economic_and_fiscal_outlook_November_2025.pdf
[11] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aSmAyG2OehbTn8EZkAUEzgAAAIU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[12] https://www.theregister.com/2025/11/11/us_taxpayers_dc_subsidies/
[13] https://www.theregister.com/2025/11/10/altman_ai_tax_credit/
[14] https://www.theregister.com/2025/11/07/uk_tax_collector_falls_short/
[15] https://www.theregister.com/2025/08/07/uk_microsoft_spending/
[16] https://www.theregister.com/2025/08/18/hmrc_prying_staff_fired/
[17] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aSmAyG2OehbTn8EZkAUEzgAAAIU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[18] https://whitepapers.theregister.com/
£800 million
Anonymous Coward
What’s that, the change from down the back of a few old Amazon executive couches?
This will soon change
jpennycook
The American Government is keen to put pressure on other Governments to reduce/remove taxes on its tech giants, so I expect we'll be asked to reduce the burden on their poor Silicon Valley execs, or face tariffs.
That much ?
I bet they all have ways around that to lower their bills.
BUT, if your company change something in your contract - Health Insurance, HMRC are down on you faster than the speed of light to tell you that you now owe £xxx and to pay nor or they will change your allowance