The future of the UK's planned Digital Services Tax, which would levy a two percent charge on large multinational companies currently dodging UK tax by sending their revenue overseas, has been put in doubt on reports that US President Donald Trump would block any planned trade agreement unless it is dropped.

Following a proposal by UK finance ministers back in 2017, the UK government proposed a Digital Services Tax as a means of collecting tax revenue currently dodged by large multinational corporations who do business in one country but send the revenue to another with more favourable tax laws. Now in draft form, the legislation would add a two percent tax on revenue generated in the UK by companies who make over £500 million globally, of which more than £25 million comes from the UK - a move which would, it is estimated, add around £275 million to the public coffers in its first year rising to £440 million by 2023 for a relatively paltry £8 million administrative cost.

While originally intended to go live as part of the 2020 budget, the Digital Services Tax may have to be scrapped following reports that US President Donald Trump would block any trade deal between the US and the UK - necessary as part of the UK's ongoing departure from the European Union, after which it will no longer be able to operate under the EU-US trade agreement - unless the Digital Services Tax is scrapped.

According to a report in The Telegraph, President Trump's administration has informed the UK Government that no trade deal could be agreed unless the Digital Services Tax is taken off the table. The same was communicated, via Twitter, of France's own tax on digital services, which is set at a higher three percent rate, with President Trump stating that 'we will announce a substantial reciprocal action on [French President Emmanuel] Macron’s foolishness shortly. I’ve always said American wine is better than French wine,' before clarifying that any planned reciprocal tariffs may be on wine or 'something else.'

UK Prime Minister Alexander Boris de Pfeffel Johnson - known to the public, but not his family or friends, as the carefully-constructed character 'Boris Johnson' - has not yet responded to the reports, but was known to be discussing trade deals with his US counterpart late last week.


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