From 1 November 2020, advertisers running Google Ads campaigns in the UK, Turkey and Austria will pay the new digital services taxes. These fees will be subject to local taxes in the respective countries.
Different countries will also be paying different amounts:
- 2% in the UK
- 5% in Austria
- 5% in Turkey
In the UK, the money will come from digital companies with a minimum of £500 million in global revenue and £25 million in UK revenue. Google isn’t alone in being charged digital services tax – Amazon and Facebook are also subject to payment. In fact, Amazon’s digital services tax came into force on 1 September 2020, and was passed onto sellers.
A Google spokesperson has said:
“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.”Source: cityam.com
How to prepare for Google’s digital services tax
Don’t wait for the tax to come into action – start planning now. You need to know how the changes will affect you from November.
When it comes to budgeting, remember that the fees will be added on top of your account budget. You need to factor it in – a budget of £100 in the UK will now see a billing of £102 because of the tax. You’ll also need to add on other payments, like VAT, that apply in your country.
If you no longer want to advertise in the UK, Austria or Turkey, set up location exclusion zones.
Will you still be advertising in these countries when the digital services tax comes into effect? Let us know in the comments or tweet us @TeamTillison.