US Retaliation for UK Digital Services Tax

Remember the Digital Services Tax which was supposed to be applied to mega Internet giants? The one that saw Amazon promptly pop your fees up 2% so that they didn’t have to pay it and which saw Google tack 2% tax on to your advertising bill (which they don’t even display up front or so when you carefully budget you realise you’ve overspent)? Well the Americans didn’t like it so now it’s US retaliation time.

Not liking their tech giants having a UK digital services tax imposed, the Biden administration has just moved forward legislation which would see a 25% tariff on a selection of UK goods. The aim of the legislation is to guesstimate how much revenue the digital services tax will raise from US tech giants (even through much of the time you as a small business are ultimately paying it), and raise the same amount in what in US parlance would be known as punitive damages.

The message is very clear, the US are telling the UK, hands off our tech giants or face US retaliation.

The types of goods that could face the US retaliation 25% tariff range from artist paint to perfume, make-up and shampoo, dresses, coats, ties and shoes, ceramics (including toilets) and Jewellery, furniture, video games and equine saddles and harnesses.

The ultimate victims of the US retaliation will be US consumers who are bilked by massive import charges upon delivery and/or British companies who will see a loss of trade once US consumers realise just how much their purchase is going to cost them.

The UK government position is that until a global fair taxation system is put in place to tax companies based on the activity within a country, they’ve been forced to act unilaterally. They’ll also consider all options if the US retaliation tariffs are implemented.

Frankly, the only Internet giant that we’re aware of that is paying the digital services tax themselves without passing it on to you is eBay. The rest… well they don’t care, don’t want to pay any more UK tax and so the US response will just hurt everyone bar the companies who have carefully arranged their tax affairs to pay as little into the societies they profit from as legally possible.