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The United Kingdom is in discussions with the US on the reduction or abolition of Britain’s digital services before April 2, as it seeks to avoid US President Donald Trump’s global tariffs.
US Ambassador Lord Peter Mandelson told Financial Times that “the taxes itself is in question,” and signaled that a set of options were on the table, except that they completely shattered it.
People informed about the discussions said the options examined by the United Kingdom Treasury depended on whether London received a clear offer from Washington to exclude Britain from punitive fees.
Trump has pledged to impose “reciprocal” tariffs on US trading partners from April 2, aiming not only to countries that have fees for US imports but also other taxes affecting US companies.
Britain’s digital services tax, which strikes American technology giants, including alphabet, Meta and Amazon, is expected to collect about £ 800m in 2024-25, at a time when the treasure is trying to strengthen public finances.
Liberal Democrat leader Sir Ed Davey has warned the United Kingdom Government not to abolish US demands by lowering the digital services tax, claiming that such action would be “giving Trump’s harassment”.
Technology Secretary Peter Kyle told FT that discussions were currently at a “very early stage”, but that people “will begin to see the fruits of those discussions very soon.”
“The digital services tax is on the table, but there are still no conclusions,” said an informed official on the negotiations. “We have to make sure everyone is happy.”
Jonathan Reynolds, Secretary of Business and Trade in the UK, held talks in Washington this week to explore a possible deal. His allies said they were seeking to move at the pace to secure an agreement.
Kyle and Mandelson were on the West Coast of the US this week meeting technology chiefs who want to see the dated digital services tax. Mandelson wants to create a technology pact in the UK, including cooperation for the development of artificial intelligence.
The digital service tax was presented by the former Conservative Government in April 2020 to ensure that global digital businesses paid tax reflecting the value they derive from the UK clients.
Flat rate 2 percent of the tax applies to companies that have global income greater than £ 500m, and applies to revenues deriving from the UK.
