HMRC is witnessing record numbers from the Digital Services Tax(DST) for the 2025/2026 financial year. The expected DST is calculated to be around GBP 1.1 billion, marking the first time that this type of tax revenue has surpassed the GBP 1 billion mark.
DST Levy – Reminder
The DST is charged at a 2% rate on revenues generated in the UK by large tech companies, mainly social media digital platforms, search engines, and digital marketplaces.
The DST is applied exclusively to digital service providers whose global revenue exceeds GBP 500 million, and UK-specific revenue is above GBP 25 million.
Digital Services Tax Revenue Growth
The growth hasn’t passed unnoticed by HMRC, as well as by the US administration. HMRC noted that the revenue from this tax has trebled from GBP 358 million since it was introduced in 2020. UK’s income from the digital services tax is believed to be the highest globally.
The tax mainly falls on the US tech giants. As noted in the first year since its introduction, five US companies(Apple, Amazon, Google, Meta, and Microsoft) accounted for 90% of DST. Today, the situation is very different, and as HMRC emphasized, now there are 32 companies that pay DST.
The last overview of who are taxable persons under the UK DST framework shows that 20 of 32 companies are US-based.
As the DST bill grows, and to some extent influences the profit margins of big tech companies, many companies have decided to allocate this “reimbursement” to consumers by increasing prices, like Amazon for various merchant or FBA services, or Meta with advertisers.
DST and US Administration
US administration is continuously “shouting” about the introduction of retaliatory tariffs towards countries that impose the DST levy on big tech companies(that are, in most cases, US-based).
Some countries like Canada and New Zealand have decided to abandon DST tax under US pressure.
UK, for now, is resisting this pressure and is recording DST revenue for the financial year 2025/2026.