Google adds new digital services taxes in the UK

Google Ads – Learn all about the new digital services taxes in the UK & what it means for your business

The recent announcement of the new Google adds digital services tax charge in the UK has hit many advertisers inboxes this month and you might be one of them. The recent introduction of the Digital Service Tax has caused Google to increase the price of its advertising platform. Starting from November 1 2020, an additional 2 percent will be charged to businesses that use Google Ads in the UK. Customers working in Turkey and Austria will also receive an increase in ad costs of 5 percent.

• What does this mean?

• Who is mainly affected by these newly introduced measures?

• And most importantly, what will happen next?

What Is The New Digital Services Tax & Why Is Google Increasing its Cost to You?

To better understand the whole situation, one must learn what this new digital tax means.

For starters, The Digital Services Tax means that a two percent tax will be implemented on the revenues of search engines, social media services, and online marketplaces generated from UK-based users. This is the UK Government’s effort to make these large companies pay more tax.

Who is Affected by Google adding the new Taxes in the UK

The UK Government stated that this newly introduced tax would be charged to large companies with revenues of more than £500m. It’s safe to say that major tech companies such as Google, Amazon, eBay, Facebook, and many more will receive direct hits. This is why Google decided to levy a two percent increase to its advertising platform. Instead of absorbing these new measures’ costs, Google passed down the tax to its consumers to cover the costs.

This move will significantly affect UK-based businesses that run ads on the platform. It’s a domino effect. Many marketers will agree that this is a big blow to them, and it will require more effort to adequately react and adjust to the new digital tax.

How To Prepare For the extra costs in the UK

As Google adds new digital services taxes in the UK, running ads on this platform will become more expensive for businesses.

If you’re a Google advertiser, you have two options. Firstly, you can perform some cutbacks if you want to keep the same marketing budget. However, this will also result in a decrease in your advertising visibility. Or, if you’re planning to continue with the same marketing spend, you will need to add the new tax cost to your budget. Of course, this also means that you will need to spend more when it comes to your advertising activities.

The next step is up to you. It’s crucial to review how the new tax will affect your business. After the much-needed evaluation, you can choose the path that your business will take.

Google adds new digital services taxes in the UK the Conclusion

With the new digital service tax, it’s more challenging to restructure your business’s marketing strategies. Especially while ensuring it falls within the budget. However, as long as you put in the work to learn its impact and carefully plan your next steps, your business can get back on track in no time.

If you are running Google Ads for your business, we are happy to talk with you and help show you how to improve the results you get for your spend. Simply fill out our Free Google Ads Audit form, and our friendly and highly experienced team will be happy to help.