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U.S. reaches DST agreements with India and Turkey

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Tax Hot Topics newsletter The U.S. recently came to terms with two more countries regarding the transitional approach from existing digital services taxes (DSTs) to implementing Pillar One of the Organisation for Economic Co-operation and Development (OECD) and G20 Inclusive Framework’s two-pillar plan regarding the digitalization of the economy.

The two agreements were announced via the Treasury Department’s Turkey announcement, released Nov. 22, 2021, and the Treasury Department’s India announcement, released Nov. 24, 2021. Both releases state these agreements represent a “pragmatic solution” for global economies to work towards implementation of the OECD/G20 Inclusive Framework’s multilateral tax regime. In addition, the U.S. agreed to terminate trade measures implemented as a result of the Turkish and Indian Digital Service Taxes (DSTs).

Any liabilities generated by U.S.-based companies that accrue during an interim period—generally defined as “after political agreement is reached and before Pillar One takes effect”—will be creditable against future taxes accrued under Pillar One. These agreements follow similar DST withdrawal announcements from the Treasury Department in October 2021, from a joint statement with Austria, France, Italy, Spain and the United Kingdom.

Contact:
David Sites
Managing Partner
International Tax Services
Washington National Tax Office
T +1 202 861 4104

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