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The British government has confirmed that its Digital Services Tax (DST) will remain unchanged under the terms of a new trade agreement with the United States, despite long-standing American opposition to the levy.
The 2% tax, which targets revenues earned in the UK by major technology firms such as Amazon, Google, and Meta, was a point of contention in earlier trade discussions. However, UK officials announced Thursday that the tax will not be rolled back or altered as part of the latest transatlantic deal.
“The Digital Services Tax remains unchanged as part of today’s deal,” the government said in a formal statement.
The announcement underscores the UK’s commitment to taxing digital giants based on revenue generated within its borders, a policy the U.S. government has criticized as disproportionately affecting American companies. Former President Donald Trump, who is again running for office, previously described such taxes as “designed to plunder American companies.”
While the DST stays in place, the UK and the U.S. have agreed to pursue a digital trade framework to reduce administrative barriers for British firms exporting digital goods and services to the United States.
“Instead, the two nations have agreed to work on a digital trade deal that will strip back paperwork for British firms trying to export to the U.S., opening the UK up to a huge market that will put rocket boosters on the UK economy,” the statement continued.
Introduced in April 2020, the UK’s DST applies to revenues earned from search engines, social media platforms, and online marketplaces. It primarily targets companies with over £500 million in global revenues and UK-specific digital revenues exceeding £25 million annually.
As of 2025, more than 20 countries have implemented similar measures, prompting a broader global debate on how to tax digital services in the absence of international consensus fairly. Negotiations continue at the OECD level for a worldwide digital tax solution, though delays have led several countries to press forward with unilateral approaches like the UK’s DST.
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