Digital Service Taxes, or DSTs, have been permeating the trade environment since 2018, but COVID-19 and the OECD’s digitalization of the economy project, commonly referred to as BEPS 2.0, have accelerated the focus on DSTs. The stated aim of DSTs is to ensure that “market” countries get increased taxing rights over the profits of tech-based multinational companies that sell into their local market, and collect data from and target advertisements at local audiences, regardless of their physical presence.
Who should be preparing for DSTs? Not just companies offering primarily digital services or goods. DSTs can be very broad in scope, covering not only online sales, but also digital advertising, data usage, e-commerce, streaming/downloading, SaaS, and more. The time to assess and prepare is now for companies regardless of sector given the growing digitalization of commerce.
So, are digital taxes here to stay? And if so, what should be done to prepare for the different outcomes?