What is a Digital Tax?

Digital tax, “digital service tax” in full, refers to a tax specifically levied on the effective profits generated by certain digital services (Internet business), and most of the objects are large Internet companies.

Digital taxes are eye-catching because they target large Internet companies. For enterprises, it involves the fairness of the taxation system between entity enterprises and Internet companies; for the general public, it is directly related to the value and benefit sharing of user data. Since data comes from users and is the source of value for the platform, is it necessary for the government to impose a digital service tax on platform companies like a natural resource tax? Considerations and practices on this question are associated with not only fairness and efficiency, but also the development of the digital economy.

In July 2019, the French Senate passed a bill to impose a digital tax. According to the bill, France will levy a digital tax on Internet companies with annual global revenues of more than 750 million euros and revenues of more than 25 million euros from France. The tax rate is 3% of French market revenue.

On April 1st, the British government confirmed the introduction of a digital tax, which will apply to companies with global sales of more than 500 million pounds and at least 25 million pounds from British users. The tax base is the income of British users, and the tax rate is 2%. Her Majesty’s Revenue and Customs (HMRC) believes that by the end of the 2025 fiscal year, this tax may bring up to 515 million pounds (about 665 million US dollars) of additional annual revenue.