Why Sri Lanka’s Digital VAT Won’t Trigger US Tariffs: Understanding Digital Taxation Differences

• The USA is considering additional tariffs due to confusion between Digital VAT and Digital Services Tax (DST).
• Digital VAT is a consumption tax on end-users of digital services, aligning with OECD guidelines.
• Sri Lanka’s 18% VAT on nonresident digital service providers is similar to systems in other countries.
• Countries like India and Vietnam have benefited from reduced US tariffs due to their VAT systems.
• DST is a revenue-based tax targeting large tech firms, seen as discriminatory by the US.
• The OECD proposed solutions to address DST issues, but VAT systems are supported for digital services.
• DSTs were introduced due to delays in global tax framework implementation.

Source: newswire.lk

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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