Transition agreed toward new global tax system

The UK has struck a deal on how to transition from its digital services tax (DST) to the new global tax system agreed between 136 countries of the Organisation for Economic Co-operation and Development/G20 inclusive framework earlier in October.

The deal struck by the UK US and other European countries – Austria France Italy and Spain - outlines a credit system which will bridge the gap between the UK’s DST and the start of the new system – which is due to be implemented in 2023.

As part of the arrangement the US will not levy tariffs in response to the UK’s DST which was introduced in April 2020. The UK will also keep the revenue raised from the DST until the pillar one reforms become operational. The DST credit agreement outlines that once pillar one is in effect...