Tuesday 1 September 2020 11:49 am

Exclusive: Google to pass on digital tax cost to advertisers

Google will increase the price of advertising on its platforms in the UK due to the Digital Services Tax, City A.M. can reveal. 

In an email sent to advertisers today, seen by City A.M., the tech giant laid out plans for a two per cent ‘UK DST Fee’ which will be added to invoices from November 2020. 

The fee will apply to all adverts served in the UK across both Google Ads and YouTube. 

Read more: Amazon to pass on Digital Services Tax to customers

The firm will also apply a five per cent fee on ads served in Austria, due to a similar digital services tax, while it will also levy a five per cent ‘regulatory operating cost’ on all activity in Turkey due to “significant increases in the complexity and cost” of regulations there. 

Google is the latest tech giant to pass on the costs of the tax to customers, with Amazon earlier this month announcing it would increase seller fees on its platform in response to the two per cent tax increase. eBay have said they will not increase fees.

The UK’s digital tax, announced by former chancellor Philip Hammond, is intended to be temporary until a global agreement is reached, placing a two per cent levy on companies that operate search engines, social media websites and online marketplaces with revenues above £500m.

A Google spokesperson told City A.M.: “Digital service taxes increase the cost of digital advertising.

“Typically, these kinds of cost increases are borne by customers and like other companies affected by this tax, we will be adding a fee to our invoices, from November.

“We will continue to pay all the taxes due in the UK, and to encourage governments globally to focus on international tax reform rather than implementing new, unilateral levies.”

Advertising trade body ISBA said they feared the move had been coming.

Phil Smith, Director General of the body, said: “While this is disappointing news for our members, it is the inevitable outcome of the UK’s unilateral approach to digital taxation. 

“We have been consistent in warning government of the potential consequences of this approach, including the risk of an increase in costs to advertisers in the UK market.

“With further headwinds from government hitting the advertising sector in the coming years, it’s time government proved that they recognise the importance of the sector to the economic recovery.”