Over the last month Amazon, Apple and Google all announced price changes for UK customers specifically designed to offset the new digital services tax (DST).  Amazon have increased fees for third-party sellers by 2% and Apple are deducting an extra 2% before splitting the remains with developers.  Google have announced that from November 2020 they will be increasing fees by 2% for advertising bought on Google Ads and YouTube, but this does not apply to DV360, Google’s demand-side (programmatic) advertising platform.  We also expect Facebook to follow suit and make a similar announcement.  The only positive news was from eBay who announced that they will be absorbing the cost themselves.

Ultimately digital services taxes increase the cost of digital advertising and these kind of costs are borne by customers.  Financial stakeholders and budget owners will need to be informed and a decision will need to be made if budgets are increased or maintained at the same level.  Either way marketers will need to work harder and find ways to lessen the impact, after all important KPI such as return on spend will be impacted by the tax.

As a reminder, since the 1 April 2020 the UK introduced a 2% DST on revenues made by large businesses that provide a social media service, search engine or online marketplace to UK-based users.  This follows on from other European countries who have proposed, announced or already implemented some form of a digital services tax.  The DST is intended to be a temporary tax and originally it was hoped that a global digital tax could be agreed at the OECD level, however with the US not playing ball we can expect this to remain in place for the foreseeable future.