Google is set to increase the cost of ads on its eponymous search engine as it seeks to cover the expense of the new digital services taxes.
The online giant revealed that from November 1, advertising prices will rise 2% in the UK and 5% in Austria and Turkey following the introduction of new levies.
Several European governments have filed lawsuits against US-based tech giants, including Google, to verify the alleged dominance of the online space and to demand some returns on the huge revenues generated by these companies.
“Regulatory operating costs are added due to the significant increase in the complexity and cost of regulatory compliance in Turkey. In Austria and the UK, digital services tax (DST) charges are determined by the new digital services tax in those countries, ”Google said in a statement.
Customers in the UK could face millions of pounds in additional spending on Google ads, which also run on YouTube, but the potential returns from such exposure could make the additional costs worthwhile.
The UK introduced its digital services tax in July 2019, targeting search engines and social media platforms, with sites like Amazon, Facebook and Twitter also affected alongside Google, which said 1.6 billion pounds in revenue last year.
The tax, which came into effect on April 1, levies 2% on revenue over £ 25million generated in the UK for companies with more than £ 500million in global sales, the government hoping it will bring back ultimately around £ 500million each year.
“Taxes on digital services increase the cost of digital advertising,” a Google spokesperson told The Guardian. “Typically, this type of cost increase is borne by customers and like other businesses affected by this tax, we will be adding charges to our invoices from November. We will continue to pay all taxes owed to the UK and encourage governments around the world to focus on international tax reform rather than implementing new unilateral levies. “
Amazon has previously announced that it will also increase UK selling fees by a similar 2% margin to cover the costs of the tax.
Going through The Guardian