Digital services tax

FORTHCOMING CHANGE relating to the future withdrawal of DST: Following the OECD-led discussions that resulted in political agreement on a two-pillar solution in October 2021, the UK struck a deal with the US, Austria, France, Spain and Italy to transition away from the UK DST to the new global tax system, with a new DST-credit system being used for transition. As part of the deal, the UK will keep the revenue raised from the UK DST until the Pillar One reforms become operational and, once Pillar One is in effect, businesses will be able use the difference between what they paid in DST from January 2022, and what they would have paid if Pillar One had been in effect instead, as credit against their future UK corporation tax bill. In return, the US, which views digital services taxes as discriminatory against US companies, agreed to withdraw proposed retaliatory tariffs on some US imports from the other five countries, and committed to not taking further trade action against those countries because of their digital services taxes until the interim period ends. This agreement has been extended by all six

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