Advertisers running ads in the UK, Austria or Turkey can expect advertising costs to increase from 1st November as Google announces that it will pass on the cost of a new tax.
The digital services taxes (DST) will affect all advertisers who run adverts in any of the locations specified. The DST is set at 2% in the UK and 5% for both Austria and Turkey.
Tax on top of your budget
Google has said that DST fees will be added to customer invoices on top of any budgeted media spend. Many advertisers use Google’s budgeting features to set daily budgets; the new fee will be added in addition to pre-set budgets.
This means that an advertiser who sets a UK media budget of £100 per day will be charged £102 per day when factoring in the new tax.
In addition to this, Google has said that the new fee will also be subject to other relevant taxes, “such as sales tax, VAT, GST, or QST that apply in your country.”
Digital services tax in the UK
DST was announced by the UK government earlier this year; a new measure that is targeted at “large multi-national enterprises with revenue derived from the provision of a social media service, a search engine or an online marketplace to UK users.”
Despite the UK government’s aim, both Amazon and Google have announced that they will be passing the cost of the new tax directly onto customers.
Speaking to CityAM, a Google spokesperson said, “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.”
Continuing, Google has said it will “encourage governments globally to focus on international tax reform rather than implementing new, unilateral levies.”
It is not yet clear whether Facebook and other online platforms will follow Amazon and Google in passing on the cost of DST to advertisers.