Insights

2nd September 2020

Google Ads Digital Tax Pricing Warning – New Fees to Pay in UK November 2020

Google Ads Pricing Warning

Google Ads have just announced that they will be charging a new 2% fee on UK served Adverts from the 1st of November – What does this mean for businesses? And where does this ‘DST’ fee come from?

The Facts About Fees – Google Ads Digital Tax

Google isn’t in the habit of charging its business customers more for no reason. After all, if you have a majority of the market, you don’t keep it by driving your clients to cheaper alternatives. Just a few months ago they handed out credit to support long-standing advertisers through the early months of the Covid-19 Pandemic, for example.

So why are they suddenly adding a 2% surcharge to all our bills? Well, since April 1st, 2020 the UK Government has introduced a Digital Services Tax – 2% – on the Advertising Revenues of Search Engines, Social Media Platforms, and Online Marketplaces. This Tax only goes on Adverts served to UK users, but that is still going to be a significant dent in the Digital Giant’s profits, plus the headache of providing the taxman with details of billions of advert clicks each month.

So now Google is going to pass on the 2% tax to businesses and where Google leads, other Search Engines and Social Media may well follow. Amazon has already been the first marketplace to do so. But if this was a plan by the government to recover millions of pounds from the tech sector, then all it will have achieved is taking it indirectly from UK businesses. According to https://www.gov.uk/government/publications/introduction-of-the-digital-services-tax/digital-services-tax

This was projected to raise £280 Million in taxes in the 2020\21 fiscal year, but a significant proportion of that is now coming out of UK business profit margins.

Okay. We might see a few US and European companies decrease their advertising presence in the UK marketplace, allowing UK companies more visibility, but that is only a factor in certain industries.

VARN Advice is not to increase or decrease your budgets. A 2% fee will hopefully not have a big impact on your account profitability. But we will be considering ways in which you can recoup this expense over the coming months. 

If you have any questions about the Google Ads Digital Tax please give the PPC team a call on 01225 439960 or email us by clicking here.

Article by: Tom, Managing Director of Varn Digital Marketing More articles by Tom

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