The UK is looking to reduce digital services tax to avoid a Trump tariff

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The UK is conducting discussions with the United States about reducing or canceling the digital services tax in Britain just before April 2, as it seeks to avoid the worst tariff for US President Donald Trump.

American Ambassador Lord Peter Mandleson told the Financial Times that “the same tax is under discussion”, and pointed out that a variety of options were on the table other than its complete cancellation.

People who have seen the discussions said that the options examined by the UK Treasury depend on whether London has received a clear offer from Washington to exempt Britain from punitive definitions.

Trump pledged to impose a “mutual” tariff on American trading partners from April 2, targeting not only countries with a tariff on American imports, but also other taxes that affect American companies.

It is expected that the digital services tax in Britain, which strikes American technology giants including Alphabet, Meta and Amazon, will collect about 800 million pounds in 2024-25, at a time when the treasury tries to enhance public financial affairs.

The liberal democratic leader Sir Ed Davi warned the UK government of the discomfort in the demands of the United States by reducing the digital services tax, claiming that this step will be “Trump’s surrender.”

Technology Minister Peter Kyle FT told that the discussions were currently at a “very early stage”, but people “will start seeing the fruits of these discussions soon.

“The digital services tax on the table, but there are no conclusions yet.” “We have to make sure that everyone is happy.”

Jonathan Reynolds, UK business and business secretary, held talks in Washington this week to explore a possible deal. His allies said they are looking to move at a pace to secure an agreement.

Kyle and Mandalson on the western coast of the United States this week were meeting with technology heads, who wanted to see digital services tax. Mandson wants to formulate a technical agreement in the UK, including cooperation on developing artificial intelligence.

The digital services tax was provided by the previous conservative government in April 2020 to ensure that global digital companies pay a tax that reflects the value they derive from UK clients.

The fixed rate tax is applied by 2 percent to companies whose global revenues exceed 500 million pounds, and are applied to the revenues derived from the United Kingdom.