- Latin American countries face challenges in taxing digital services without isolating from global trade.
- The OECD’s slow progress on reallocating profits has led to unilateral digital service taxes.
- DSTs offer revenue opportunities but complicate the tax landscape and risk double taxation.
- These taxes highlight the urgency for developing economies and the limitations of multilateral solutions.
- US foreign tax credit rules add complexity, with Brazil and Colombia as key examples.
- Brazil’s gross revenue tax on cross-border services acts as a DST, targeting large digital platforms.
- Colombia extends corporate tax obligations to nonresident digital service providers, functioning as a DST.
- Latin American DSTs are seen as responses to the OECD’s delayed solutions.
- Traditional withholding taxes in the region apply to various outbound payments.
Source: news.bloombergtax.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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