On September 12, ISDA, UK Finance, the Global Foreign Exchange Division and the Commodities Working Group of the Global Financial Markets Association, and the European Venues and Intermediaries Association responded to the HMRC and HM Treasury technical consultation on the UK digital services tax (DST).

The response letter highlighted that the associations welcome the government’s efforts to reform the corporate tax rules to achieve a fair tax system and to address the tax challenges arising from digitization. The signatories support the efforts to achieve a sustainable long-term solution that would involve an internationally coordinated approach through the G-7, G-20 and the Organisation for Economic Co-operation and Development, and at the same time welcome the government’s commitment to disapplying the proposed DST once an international solution is in place.

The Associations raised issues on the scope of the financial services exemption and other matters to prevent unintended consequences for the financial services industry and stressed that in the event that the government decides to proceed with the DST ahead of an international regime, it is important that the DST legislation is targeted and proportionate to fulfill its objectives.