Draft legislation of the government’s next finance bill shows the so-called “Amazon tax”, first announced by Chancellor Philip Hammond last year, will come into effect next April.
The government will impose a 2% levy on pureplay retailers which make more than £500m in digital revenue, and with more than £25m coming from UK sales.
The new digital services tax will, according to the government, raise £400m per year by 2021.
This comes despite threats from the White House to impose tariffs on France for similar legislation, complaining that it unfairly targets US companies.
France’s new law taxes companies earning over 750m euros in digital revenue, and of which more than 25m euros come from sales in France. The tax in France is 3%, a full percentage point higher than the UK’s tax on digital giants.
Treasury financial secretary Jesse Norman said: "The UK has always sought to lead in finding an international solution to taxing the digital economy.
“This targeted and proportionate digital services tax is designed to keep our tax system in this area both fair and competitive, pending a longer term international settlement.”