The prime minister has said there are “ongoing discussions” with the United States over digital services, following the deal struck with President Trump.
The UK’s Digital Services Tax (DST) – a 2% levy which raises about £800m a year mainly from US tech companies – was widely thought to be part of trade talks with the US.
On Thursday, the government announced the DST remains “undisturbed and unchanged” as part of the US-UK deal slashing tariffs imposed by President Trump on cars and metals.
Asked if he could guarantee that there would not be any changes to the DST, Sir Keir Starmer said: “On digital services, there are ongoing discussions and various other aspects of the deal.”
Speaking to broadcasters on board HMS St Albans during a visit to Norway, Sir Keir said the deal reached with the US this week “predominantly focused on steel and aluminium and reducing those tariffs on car manufacturing and reducing the tariffs there”.
“On digital services, there are ongoing discussions, obviously, on other aspects of the deal, but the important thing to focus on yesterday is the sectors that are now protected that the day before yesterday were very exposed,” he added.
While the new deal offers some relief to industries affected by the tariffs announced by President Trump, the government is continuing to work on a wider UK-US trade agreement.
One point of tension has been the DST, which affects large multinational enterprises who run social media services, online search engines or an online marketplace for UK consumers.
It is a 2% tax on companies with revenues of more than £500m worldwide and £25m in the UK, affecting global tech giants like Amazon and Meta.
It was introduced by the previous Conservative government in 2020.
President Trump has made clear his distaste for what he sees as unfair taxes targeting American firms.
Previously, Chancellor Rachel Reeves has said the government had to “get the balance right” on negotiating with the US.
Speaking on BBC One’s Sunday with Laura Kuenssberg she said it was the “right thing that companies who operate in the UK pay their taxes in the UK, and the US government and tech companies understand as well, but we are having discussions with the US at the moment. I want to preserve free and open trade.”
Potential changes to the DST have been criticised by the Liberal Democrats, who have previously said Labour is “at risk of losing its moral compass” if it cuts the tax.
But on Thursday, Trade Minister Douglas Alexander told MPs the government had “listened carefully” to concerns about weakening online harm protections in trade talks.
He added the government had “worked hard to advance the UK’s national interest in the agreement that is reached”.
Asked about the deal on Friday, Conservative leader Kemi Badenoch said the deal was “better than nothing but it’s not much”.
“One of the things that concerns me is that we will probably now not get a comprehensive free trade agreement. It looks like Labour has settled,” she said.
