- US Policy and International Agreements: Following a G7 agreement, the US is adopting a new approach to international tax rules that may allow its anti-avoidance measures to coexist with the global minimum tax, while also targeting foreign DSTs through potential trade measures.
- Revenue and Economic Impact of DSTs: DSTs generally generate minimal revenue, with their economic burden often falling on consumers rather than the intended large digital platforms. Countries like Austria, France, and the UK report low DST revenues relative to their overall budgets, raising concerns about their effectiveness and inviting trade disputes.
- Recommendation for VAT Implementation: Experts suggest that countries should transition from DSTs to value-added taxes (VATs) for taxing digital services, as VAT is trade-neutral, does not discriminate between firms, and has proven to raise substantial revenue without the complications associated with DSTs.
Source Taxfoundation
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