Google and Amazon will pass digital service tax on to advertisers

Google is increasing advertising prices for British customers to cover the costs of the UK's digital services tax (DST), which came into effect earlier this year.

The search giant has reportedly told British advertisers that it will charge an additional two per cent in fees from the 1^st November, to cover its higher costs.

In a statement, Google said that such taxes increase the cost of digital advertising, and those costs are typically borne by customers.

Google added that it will continue to pay all taxes due in the UK, and would 'encourage governments globally to focus on international tax reform rather than implementing new, unilateral levies.'

According to Google, British advertisers are not the only ones affected by its latest decision; the company will also charge advertisers in Austria and Turkey an additional fee of five per cent to cover the costs of digital taxes and regulatory compliance.

However, Google is not the only company that has decided to pass these costs on to customers.

Amazon announced last month that it will charge additional fees from sellers in the UK, and in other European countries where it has been hit with additional taxes.

eBay is the only big online business so far that has stepped up to announce that they will pay the tax themselves.

The UK introduced the two per cent DST in April, after slow progress on a global agreement over how to handle taxing big technology companies, many of which are American.

At the time of announcement, the British government said that it would levy the tax against firms whose annual global revenues from digital services exceed £500 million. Of that figure, more than £25 million must be from the users based in the UK.

The DST specially applies to businesses providing social media, search engine or online marketplace services to British users - meaning that Facebook, Google, Twitter and Amazon are all targets.

The Treasury estimates that the DST will raise an extra £400m by 2021, and £500m per year in due course.

The Trump administration criticised the new tax, accusing the UK and other European countries of unfairly targeting US firms. President Trump also threatened to impose retaliatory tariffs when France revealed a plan to introduce a digital tax last year.

France's senate enacted a three per cent tax in July 2019 and announced that it would apply to firms with digital revenues of more than €25 million in France and €750 million worldwide.

Earlier this year, the French government agreed to suspend collection of the tax until the end of 2020 to avoid increased tariffs with the US government.

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• Topics
• Strategy
• Google
• DST
• Amazon
• eBay
• Facebook
• digital tax
• Digital Services Tax