UK Holds Firm on Digital Tax for US Tech Giants Despite New Trade Deal

The United Kingdom’s digital services tax targeting large U.S. tech firms will remain intact despite a newly inked trade agreement with the United States, British officials confirmed on Thursday, according to Reuters.

The 2% levy, which applies to revenues generated in the UK by digital giants such as Amazon, Google, and Meta, has drawn criticism from U.S. leaders who view such taxes as unfairly targeting American companies. Nonetheless, the British government emphasized that the current tax structure will not be modified under the terms of the latest deal between the two countries.

“The Digital Services Tax remains unchanged as part of today’s deal,” the UK government stated in an official announcement, per Reuters.

Instead of addressing the tax directly, the agreement focuses on easing trade barriers for British businesses looking to operate in the American market. According to the UK’s statement, the two nations will pursue a digital trade framework aimed at reducing bureaucratic hurdles and boosting transatlantic commerce. Officials touted this as a significant opportunity for UK exporters, claiming it would “put rocket boosters on the UK economy.”

Read more: US Trade Talks May Have Far-Reaching Impact on UK Tech Regulation, But It Doesn’t Have to Be All Or Nothing

The decision to maintain the digital services tax comes despite longstanding opposition from the United States. Former President Donald Trump previously condemned such measures, arguing they were “designed to plunder American companies,” as reported by Reuters.

Around 20 nations have implemented similar digital levies, prompting ongoing tensions between the U.S. and its trading partners. While negotiations continue on broader international tax reforms through forums like the OECD, the UK has opted to preserve its existing policy for now.

Source: Reuters