- Digital services have led to a reevaluation of tax structures for tech companies.
- Companies face digital services taxes and new international tax regulations.
- Multinational tech firms must manage complex local, regional, and global tax laws.
- The OECD/G20 has prioritized addressing tax challenges from digitalization since 2015.
- The Two Pillar solution was established in 2021 with over 140 countries participating.
- Pillar One reallocates profits of large tech companies to market jurisdictions.
- Pillar Two sets a global minimum tax rate of 15 percent for multinational enterprises.
- Many countries have introduced digital services taxes to capture revenue from tech firms.
- Over 25 countries have implemented DSTs, with more having proposals.
- More than 60 countries have extraterritorial VAT/GST systems for digital services.
- DSTs often target online advertising and platform intermediation revenues.
- DSTs vary in scope and tax rates, with some targeting video and music streaming.
- International tax reform cooperation is challenging, with DSTs seen as interim measures.
- A political agreement in 2021 provided a moratorium on DSTs pending new frameworks.
- Agreements for transitioning away from DSTs were extended to 2024.
Source: bakermckenzie.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.
