- U.S. policymakers are challenging foreign Digital Services Taxes (DSTs), arguing they are discriminatory, provoke trade tensions, and impose economic burdens largely on consumers rather than large digital companies.
- Recent U.S. actions, including Section 899 and trade threats, pressured Canada to withdraw its DST and influenced G7 talks toward minimizing U.S. firms’ exposure to the global minimum tax, reflecting a broader strategy to discourage DSTs internationally.
- With low revenue yields and high trade risks, experts recommend countries shift from DSTs to VAT-based taxation on digital services—already adopted by over 100 countries—as a neutral, efficient, and less confrontational alternative.
Source Tax Foundation
