New UK Digital Services Tax Will Hit Apple

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LONDON – The UK Government announced plans to introduce a new Digital Services Tax Thursday. It said it will apply to social media platforms, search engines, and online marketplaces, meaning Apple would be affected.

Developers have been paid more than $70 billion since Apple's App Store launched in 2008

2% Tax on Digital Revenue

In documents explaining the plans, the government said that there had been a “misalignment between the place where profits are taxed and the place where value is created. In particular, many of these digital businesses derive value from their interaction and engagement with a user base.”

Consequently, the UK government wants to introduce a 2% tax on firms with over £500m of worldwide digital revenues, £25m of which comes from UK users. In Q2 2019, Apple posted revenue of $58 billion, $11.5 billion of which came from services. Net sales in Europe were at $13.85 billion. I find it hard to see how it will not meet the law’s criteria.

The legislation is intended to be introduced in the UK Government’s Budget for 2019-20. It will apply to revenue earned from April 1, 2020.  However, with Prime Minister Theresa May set to stand down in two-weeks time, there is no guarantee her successor will stick with her plan. France recently announced plans for a similar law too,

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Lee Dronick
Lee Dronick

Taxation without representation? 😀