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The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of digitalisation of business.

28 July 2020

A call for evidence on reviewing business rates, published by HMT on 21 July 2020, includes an online sales tax as a partial alternative. 

The scope of an online sales tax would need further consideration, but the document suggests “it could be levied on the revenues that businesses generate from online sales to UK customers, and focused on sales in direct competition with those carried out through physical premises”.  It is an obvious potential extension to the imposition of the UK’s Digital Sales Tax (DST) which is in force from 1 April 2020.

As we detailed in our previous note on progress of DST through Parliament, since the start of the pandemic, there have been frequent calls for an expansion of the scope of the UK DST. For example, on 1 July 2020 during the discussions on the Finance Bill 2020 in the Report Stage in the House of Commons, Labour Bridget Phillipson (Shadow Chief Secretary to the Treasury) called for the government to expand the scope of the DST highlighting that the current design does not ensure a level playing field between online retailers and high-street, bricks-and-mortar retailers and it does not cover streaming services. A further reference to online retailers not being in scope of the DST came from Conservative back-bencher Andrew Mitchell who called for a level playing field between online shops and the high street.