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US policymakers, especially Republicans, have aggressively challenged digital services taxes (DSTs), viewing them as discriminatory excise taxes targeting mainly US companies, leading to trade pressures like Canada’s rescinding of its DST amid threatened negotiations.
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DSTs tax gross revenues rather than net profits, disproportionately impacting firms with thinner margins, and resemble tariffs on imported digital services, drawing bipartisan US opposition and trade retaliation threats under mechanisms like Section 301.
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Recent US responses include removing Section 899 from tax legislation after G7 agreements, while continuing to label DST revenues as grounds for retaliation under Trump’s “Fair and Reciprocal Plan,” highlighting ongoing tensions in international tax and trade policy.
Source: taxfoundation.org
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