Digital economy under pressure - where next for tax and regulation?

My colleague Rhiannon Kinghall Were has already covered the tax aspects of this week's Spring Statement (available here).

Spoiler alert: there are no big announcements on tax and spending decisions.

One part of the economy, however, has attracted the Chancellor's interest.

For the tech industry, a consultation has recently closed on the design of a digital services tax (DST), which, in very broad terms, is a tax on the UK-related turnover of certain types of online businesses. At the Spring Statement, responses to that consultation were published, a key document for those potentially within the scope of the new tax.

Away from tax, the Chancellor hinted that UK policy towards the digital economy is changing and the environment is likely to become more difficult for the big tech firms.

The Government-commissioned report from the US academic Jason Furman (former Chief Economist to President Obama) will make challenging reading for some in the digital economy (available here).

In his Spring Statement, the Chancellor announced that he has asked the Competition and Markets Authority to undertake a market study of the digital advertising market as soon as possible. Given the content of the Furman review, this is likely to be a first step towards a more comprehensive overhaul of the regulatory, anti-trust and consumer protection regime that applies to large tech businesses.

The policy challenges for digital businesses with a significant UK customer base are therefore mounting. What started out as a tax issue (the DST) is becoming a more wide-ranging regulatory response in the UK to some of the questions posed by the tech sector.