Covid-19 Budget: Business leaders in Scotland calling for Business Rates to be replaced with an online sales tax

September 2020

  • 81% of business leaders in Scotland expressed a clear wish to see Business Rates replaced with an online sales tax similar to Digital Services Tax
  • 71% believe that boosting businesses and jobs should be the top priority for government spending during a post-Covid recovery
  • 69% believed the Government should have sought to extend the Brexit transition period, given the damage to the economy

The government should replace Business Rates with an online sales tax similar to Digital Services Tax according to a poll of business leaders by accountancy and advisory firm BDO LLP.  

A significant majority (81%) of Scottish respondents indicated that with businesses moving more towards online trading, a trend that has increased during Covid-19, much-needed revenue should be raised by taxing online sales.  

Replacing Business Rates with an online sales tax is not the only area where respondents would like to see the government introduce changes. When asked what should be the top priority for government spending until 2025 once Covid-19 support measures are withdrawn, nearly three-quarters (71%) opted for ‘boosting businesses and jobs’.  

Opinions are divided on how the government can support the younger generation who are likely to bear the brunt of the post-Covid debt, with over a third (38%) hoping that Inheritance Tax (IHT) will be simplified to help the older generations pass on their wealth. Instead, the priority for over one in four (29%) would be to build more affordable homes for first time buyers. In contrast, just 4% believe nothing should be done to support younger generations as the financial system is already fair.  

Meanwhile, given the economic impact of Covid-19, almost three quarters (69%) of Scottish business leaders believed the government should have sought to extend the Brexit transition period beyond 31 December 2020, higher than the overall picture where 58% of total respondents believed there should be an extension.  

Commenting on the survey’s findings, Martin Bell, Head of Tax at BDO LLP in Scotland, said: “Business leaders are looking for the government to show that it will deliver on its promise in March to make the economy prosper as we move out of the initial reactive phase of responding to Covid-19.  Of course, the Chancellor could not then have known the true impact of Covid-19.  

“It is clear from the survey that business leaders are focused on the future.  While the majority believe boosting business and jobs should be a top priority, there is definitely also a concern about the consequences of the Brexit transition period ending in just over six months at a time when the UK and global economies are recovering from a massive shock. 

“There is widespread consensus that digital companies should pay more tax on their online sales in order the help the economy recover. A major challenge will be how to achieve that while also encouraging ongoing innovation.   

“International cooperation on digital taxes is the preferred solution of policy makers but it is proving difficult to achieve in practice.  Some countries including the UK have decided to introduce their own tax, however going it alone has dangers as other countries including the USA have threatened retaliatory measures.  The government will need to carefully consider its next steps.” 


Note to editors 

About BDO LLP 

Based on a survey of more than 1,000 business leaders conducted during 27 May 2020 – 5 June 2020. 

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.  

Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high-growth businesses that fuel the economy.   

We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed.   


BDO LLP operates in 17 locations across the UK, employing nearly 5,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network. 

BDO’s global network 

The BDO global network provides business advisory services in 168 countries, with 89,000 people working out of 1,800 offices worldwide. It has revenues of $9.6bn.   


Emma Ordidge  

Senior PR Adviser  

[email protected] 

Press office:  

020 7893 3000 

[email protected] 


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