ITI: Narrow Definition of Digital Services Taxes and Similar Measures Would Destabilize International Tax System
WASHINGTON – Today, global tech trade association ITI provided feedback to the Organisation for Economic Co-operation and Development’s (OECD) draft Multilateral Convention (MLC) provisions on digital services taxes (DSTs) and other relevant similar measures. In its comments (opens in a new tab), ITI emphasized the need for the OECD/G20 Inclusive Framework to strengthen the definition of digital services taxes and other relevant similar measures so that it better reflects the breadth of measures that have led to the fragmentation of the international tax system.
“A narrow definition of ‘[digital services taxes] and other relevant similar measures’ may open a new paradigm whereby a problematic measure – that is, a tax measure that clearly disregards international tax norms – may be implicitly allowed if it is not explicitly prohibited. Such an approach would restart the tax disputes and trade barriers that today’s project is intended to resolve,” ITI wrote in the comments. “From this perspective, the proposed definition will not be sufficient to restore the predictability the international tax system has afforded companies to conduct business globally. Specifically, significant economic presence (SEP) measures and withholding taxes (WHTs) designed to evade tax treaties should clearly be considered as other relevant similar measures for the purposes of the standstill and rollback.”
ITI has consistently advocated (opens in a new tab) that in order to bring predictability, stability, and certainty to the international tax environment, the OECD/G20 Inclusive Framework must produce a clear, robust definition of DSTs and relevant similar measures that provides for the withdrawal of existing destabilizing measures and protects against future unilateral measures with similar impacts. By doing so, the OECD/G20 Inclusive Framework will prevent future challenges to longstanding international tax principles and the development of new trade barriers.
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