X stands to benefit if UK pulls digital services tax in trade deal with US

Elon Musk’s X stands to benefit financially if the government pulls an £800m tax on US tech firms as part of an economic deal with Donald Trump, as a prominent tax campaigner indicated the social media platform qualifies for the levy.

Dan Neidle, the head of the non-profit organisation Tax Policy Associates, said the social media platform was eligible for the digital services tax, which is on the block in negotiations between the US and the UK.

“Technically it’s fairly clear X should pay the DST,” he said.

Ministers have been discussing dropping the DST as part of negotiations with the US in exchange for the Trump administration granting the UK a carve-out from tariffs which would otherwise be levied on 2 April.

The technology secretary, Peter Kyle, said on Monday that “nothing was off the table” when it comes to the tax, which was first imposed by the Conservatives in 2020 to stop international technology companies avoiding tax by hiding their profits offshore.

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Labour MPs have voiced their concern about the prospect of the government dropping the DST under pressure from the Trump administration. Rachael Maskell said this weekend: “I would be concerned if relief was granted in what would be seen as a dash to let the US tech companies off the hook, while at the same time as making disabled people pay for the revenue loss, with their lifelines being cut.”

Another Labour MP said: “This would be the very worst optics: dropping a tax on big tech companies in the same week we announce more departmental spending cuts and give the details about our welfare cuts.”

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According to the National Audit Office, 90% of DST revenues in its first year of operation in 2020-21 came from five businesses. Amazon, Google, eBay and Apple have publicly acknowledged paying the tax, and Facebook’s parent, Meta, is widely presumed to have done so.

The tax is expected to raise £800m this year, rising to £1.1bn by the turn of the decade, according to the Office for Budget Responsibility.