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UK could drop Digital Services Tax in bid to avoid conflict with US

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The UK government is allegedly reconsidering its position on the much-criticized Digital Services Tax (opens in new tab).

According to an IT Pro report (opens in new tab), the Ministry of Finance is considering ditching the proposed two percent tax on American tech giants, as it may hurt its overall trade agreement between the UK and the US.

US officials have described the proposed tax as “unfair”, but the UK Treasury said it was not in violation of “international obligations”. However, as Brexit negotiations progress and Britain seeks new partnerships, a trade deal with the States grows more important.

Further, early estimates suggest such a tax (opens in new tab) could only raise roughly $660 million, causing some commentators to question its merit.

“[The government has been clear it’s a temporary tax that will be removed once an appropriate global solution is in place, and we continue to work with our international partners to reach that goal," a Ministry of Finance representative is quoted as saying.

Last year, the EU canceled its union-wide tax plans, forcing both Spain and France to introduce their own national laws. So far, France has forced Facebook to pay almost $120 million in taxes.

Sead Fadilpašić is a freelance tech writer and journalist with more than 17 years experience writing technology-focussed news, blogs, whitepapers, reviews, and ebooks. And his work has featured in online media outlets from all over the world, including Al Jazeera Balkans (where he was a Multimedia Journalist), Crypto News, TechRadar Pro, and IT Pro Portal, where he has written news and features for over five years. Sead's experience also includes writing for inbound marketing, where he creates technology-based content for clients from London to Singapore. Sead is a HubSpot-certified content creator.