Digital Services Tax

About Digital Services Tax

Digital services taxes, or DSTs, are taxes on the revenue of large technology companies. The UK introduced a 2 percent DST in 2020 on digital services revenue, targeting companies like Google, Facebook, and Amazon. France, Italy, Spain, and other European countries introduced similar taxes. The taxes were controversial because they primarily affected US technology companies. The US threatened tariffs in response. The OECD negotiated a two pillar solution: Pillar One would reallocate taxing rights to market countries, and Pillar Two would establish a global minimum tax of 15 percent. Over 140 countries agreed to the framework in 2021. Implementation has been slow, with the US Congress not ratifying the treaty. DSTs remain in place in many countries pending a global agreement.