In March this year the HMRC announced that a Digital Services Tax (DST) will be applied to search engines, social media services and online marketplaces which derive value from UK users.

Amazon recently stated that it would be passing on the 2% UK tax to sellers on its platform and Google are now following in their foot steps and passing this on to all UK advertisers. Last year Google paid £44m in UK corporation tax last year but took around £6bn in UK ad revenue, therefore the new 2% tax is likely to lead to an additional £120m extra tax for HMRC. On Tuesday Google also announced that they would be passing on a 5% DST to both Austria and Turkey. It is likely that we will see Facebook follow suit in coming weeks.

The 2% tax will not be displayed in the Google Ads interface but will instead be added to each final invoice as an additional tax. This means that it will not effect the Cost Per Conversion or ROAS in your campaign reporting but it should be factored in to the overall ROI.

It’s important to make your finance team aware of this new tax so that they are not in for a surprise when their Google invoice arrives! It should probably be a consideration to future marketing budgets as this will effect media budgets.

If you would like any more information or assistance with managing your Google Ads account then please get in touch.