DST

Digital Services Tax

A tax levied on the gross revenue of large multinational companies, primarily in the technology sector, that generate revenue from providing digital services in a particular jurisdiction. It aims to address the mismatch between where these companies generate revenue and where they pay taxes, ensuring that market countries receive a fairer share of tax revenues.

DSTs are typically applied to specific digital activities, such as online advertising, online marketplaces, user data sales, and digital content streaming. They are distinct from income taxes, online sales taxes, or value-added taxes (VAT), focusing on taxing the gross revenue rather than profits or the value added.

Several countries, including France, Italy, the UK, and India, have implemented or proposed DSTs in recent years. However, the implementation of DSTs has been met with controversy and concerns about potential trade disputes and double taxation. The Organization for Economic Co-operation and Development (OECD) is working on a global tax reform proposal that could potentially replace DSTs with a more coordinated approach to taxing the digital economy.

• Abbreviation: DST