Digital services taxes target the revenues of large digital companies. These taxes apply to revenues from digital advertising, transmitting user data, online interfaces, and more. They differ from value-added taxes and income taxes. Multiple countries have implemented or proposed digital services taxes. Revenues from these taxes are rising rapidly.
Taxation Principles
The tax applies based on gross revenue streams exceeding global and domestic revenue thresholds. It taxes intermediary services that enable transactions between buyers and sellers online. The purpose is to increase taxing rights over multinational tech companies that sell into a country’s market and collect data or sell ads targeted at users there. The taxpayers are digital service providers, regardless of their liability for income or corporate taxes.