UK may scrap digital services tax in US trade talks

Elon Musk's social media platform, X, may see financial benefits if the UK drops its £800 million digital services tax (DST) during trade talks with the US. Tax campaigner Dan Neidle argues that X qualifies for this tax, which targets large tech companies. UK ministers are considering removing the DST as part of negotiations with the US. In return, they hope to avoid tariffs set to take effect on April 2. Technology Secretary Peter Kyle stated that all options are on the table concerning the tax, which was introduced in 2020 to prevent big tech firms from avoiding taxes. Concerns have been raised by Labour MPs about eliminating the DST under pressure from the US. Rachael Maskell expressed worry that this could harm vulnerable groups while letting US tech companies off the hook. Other MPs pointed out the negative public perception of cutting this tax while announcing budget cuts. The DST applies to tech businesses with over £500 million in global revenue and at least £25 million from UK users. Companies that meet these criteria pay a 2% tax on their UK revenue. X's reported revenues suggest it would owe approximately £3.6 million under the DST for its UK operations. The tax is expected to raise £800 million this year and increase to £1.1 billion by 2030, according to the Office for Budget Responsibility. Neidle noted that the DST is a "diplomatically complicated" matter. The UK has committed to abolishing it for a viable international tax framework, which has not yet been established.