Trump's return puts UK tech tax in dangerous position
British government faces tough choice about its digital-services tax as Trump prepares to return to White House. The tax which brings billions to UK budget might cause trade problems with US
The UKʼs tech-company tax system faces new problems as Donald Trump prepares to take office: A major stand-off might happen between Rachel Reeves and the new US administration
The digital-services tax (which takes 2% from UK sales of big tech firms) has been good for UK budget bringing in about £700m last year but its causing issues with US relations. Five main tech-giants pay most of this tax including companies like Google Amazon and Apple; the tax was meant to be short-term until a world-wide deal could be made
The global tax agreement that was discussed during Bidens time hasnt moved forward in US Congress‚ and with Trump coming back its looking even less likely to happen. The UK Treasury now has to make a hard choice — keep the tax and risk US anger or drop it and lose money
There is bipartisan opposition in United States to unilateral DSTs which are viewed as unfairly targeting US firms
The situation is extra-tricky because US already has plans ready from 2021 to put 25% taxes on UK goods (like tools furniture and jewelry) if needed. Reeves who will need to deal with this problem told MPs she dont want new tariffs between countries‚ but the choice between keeping good US relations and losing billions in tax money remains open
