Sep 28 2020

UK To Collect Interest On Overdue Digital Services Tax

The UK Government on September 16, 2020, tabled The Taxes (Interest Rate) (Amendment No. 2) Regulations 2020, which will enable HM Revenue and Customs to collect or pay interest on overpaid or underpaid digital services tax liabilities

The UK introduced its DST on April 1, 2020, at a rate of two percent. It applies to revenue generated by search engines, social media platforms, and online marketplaces, to revenues from those activities that are linked to the participation of UK users. It applies only to groups that generate global revenues from in-scope business activities in excess of GBP500m (USD659m) per year. Businesses do not have to pay tax on their first GBP25m of UK taxable revenues.

The new Regulations, which are expected to enter into force on October 14, 2020, provide for the following rates of interest on overpaid or unpaid DST:

• The rate of interest will be the reference rate less 0.25 percent, or 0.5 percent if greater, for DST paid before the required due date;
• The rate of interest will be the reference rate less one percent, or 0.5 percent if greater, for overpaid DST;
• The rate of interest will be the reference rate plus 2.5 percent, for underpayments of DST liability.

In all cases, the reference rate is the official bank rate as determined by the most recent meeting of the Monetary Policy Committee of the Bank of England.

https://www.tax-news.com/news/UK_To_Collect_Interest_On_Overdue_Digital_Services_Tax____97823.html

 

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