Section 301 Investigations: Foreign Digital Services Taxes (DSTs) [June 10, 2020] [open pdf - 470KB]
From the Background: "An international debate is occurring over the global taxing rights of revenues and profits earned by multinational corporations (MNCs) in certain 'digital economy' sectors. This debate is driven by concerns that these MNCs are not adequately taxed and arguments that the right to tax some of their profits should be reallocated from the jurisdiction where the MNC claims residence to the jurisdiction where their customers are located. Some countries have imposed unilateral digital services taxes (DSTs) on the gross revenues earned by digital economy MNCs. These taxes target certain MNC digital transactions with domestic businesses or online activities directed ultimately towards domestic users, even if the corporation does not have a physical presence in the country. The Trump Administration and others contend that, based on their design, many of these DSTs effectively target large U.S. MNCs disproportionately to other firms. In addition, some observers argue that the proliferation of such unilateral measures could undermine basic principles of the current international taxation system."
CRS In Focus, IF11564
Congressional Research Service: https://crsreports.congress.gov/