UK Finance Bill 2020 becomes law

Tax Hot Topics newsletter The UK Finance Bill 2020 became law on July 22 and is likely to impact U.S. companies with UK subsidiaries and have implications under GAAP.

Key provisions for U.S. companies include maintaining the corporation tax main rate at 19%. This was previously was set to be reduced to 17% from April 1. U.S. multinationals reporting under GAAP should therefore use 19% for reporting purposes.

The bill also increases the Research and Development Expenditure Credit rate from 12% to 13% for expenditures incurred on or after April 1.

Most notably, the bill brings into law the UK’s Digital Services Tax (DST) effective April 1. The DST is imposed at a rate of 2% on revenue generated by certain digital services activities with UK users. It applies only to large companies with more than £500m in global digital services revenues and more than £25m in UK digital services revenues.

David Sites
Washington National Tax Office
T +1 202 861 4104

Cory Perry
Senior Manager
Washington National Tax Office
T +1 202 521 1509

Yasmin Dirks
Washington National Tax Office
T +1 202 521 1506

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