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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchA digital services tax (DST) generally applies to specified digital-service revenues attributed to users or customers in a jurisdiction; corporate income tax (CIT) generally applies to taxable profits. They are different taxes, and a business may owe both. The exact exposure depends on each country’s rules for covered activities, thresholds, revenue attribution, profit calculations and tax interactions.
How a digital services tax differs from corporate income tax
| Comparison | Digital services tax | Corporate income tax |
|---|---|---|
| Typical tax base | Gross revenues from specified digital activities, attributed to users or customers in the taxing jurisdiction under local rules. OECD’s 2025 GloBE commentary describes DSTs generally as gross-revenue taxes. | Taxable profits calculated under the jurisdiction’s income-tax rules, including its deductions and adjustments. |
| Who or what is covered | Usually businesses earning revenue from activities defined in the local statute, potentially subject to group-wide and local revenue thresholds. Categories and thresholds vary by country. | Businesses within the reach of the jurisdiction’s general corporate tax rules, subject to rules such as residence, source and permanent establishment. This comparison does not establish the territorial rules of any particular country. |
| Effect of a loss or low margin | A revenue-based charge may still need to be assessed even if the activity has a low profit margin or a loss. Some statutes provide special calculations or loss-related rules. | Because the base is profit, the calculation generally depends on taxable income after allowable deductions and adjustments, subject to local law. |
| Relationship to the other tax | OECD commentary says DSTs are generally designed to apply in addition to, not instead of, a jurisdiction’s generally applicable income tax. Whether a DST is deductible or creditable is a separate local-law question. | CIT remains relevant where a DST also applies. The taxes are calculated on different bases, and local rules determine how they interact. |
A company’s label—such as “technology business” or “digital company”—does not by itself determine DST liability. The relevant questions are whether its particular revenue comes from an activity covered by the local law and whether it meets that law’s other tests.
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Can a business owe both taxes?
Yes. A DST and CIT can apply to the same business in the same jurisdiction because the DST generally targets selected revenue while CIT targets taxable profit. OECD’s 2025 commentary describes DSTs as generally additional to an ordinary income tax. That does not decide every domestic question about deductibility, credits or treaty treatment; those depend on the applicable rules.
The OECD commentary also says DSTs are generally not income taxes for purposes of the GloBE rules’ Covered Taxes definition. That is a characterization for the Pillar Two calculation, not a universal answer about how a country treats a DST for its domestic tax return.
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What the UK DST example shows
The United Kingdom illustrates how a DST can be limited by activity, revenue thresholds and a local allowance. HMRC’s DST01200 guidance identifies social media services, internet search engines and online marketplaces as the covered categories. The figures below are UK-specific, not a standard used worldwide; HMRC’s cited manual pages were last updated on 31 July 2024, so check the rules for the filing period in question.
| UK DST test or feature | HMRC guidance |
|---|---|
| Worldwide group threshold | More than £500 million in worldwide digital-services revenue. |
| UK-user threshold | More than £25 million in revenue attributable to UK users. |
| Annual allowance | £25 million of UK digital-services revenue. |
| Usual rate | 2% on UK digital-services revenues above the allowance, once both thresholds are exceeded. |
HMRC’s threshold guidance applies the tests to group revenues from digital-services activities. Its DST21000 guidance describes the base as gross revenues received from providing a covered activity to UK users, making service classification and user attribution central to the calculation.
For a simplified illustration, if a group exceeds both thresholds and has £40 million of UK digital-services revenue, the usual calculation on the amount above the £25 million allowance would be 2% of £15 million, or £300,000. This is an illustration of the stated rate and allowance, not a full liability calculation: HMRC guidance includes a special alternative calculation and rules concerning losses, which should be checked against the group’s circumstances.
The UK government’s DST policy paper says the tax is deductible for corporation-tax purposes subject to the normal corporation-tax rules. That UK treatment should not be assumed for a DST in another country.
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Pillar One: Amount A
The OECD describes Amount A as a coordinated reallocation to market jurisdictions of taxing rights over a share of the profits of the largest and most profitable multinationals operating in those markets. The OECD overview of the Multilateral Convention says it is intended to improve tax certainty and remove DSTs. Convention implementation and country participation are time-sensitive; the overview’s stated intention does not mean every national DST has already been removed.
Pillar Two: the GloBE minimum-tax rules
The OECD describes Pillar Two’s Global anti-Base Erosion (GloBE) rules as a coordinated system that can impose top-up tax when a multinational group’s effective tax rate, measured jurisdiction by jurisdiction, falls below the agreed 15% minimum. The OECD overview identifies the relevant group threshold as annual revenue over EUR 750 million. These rules are separate from a country’s ordinary CIT calculation and DST rules; the 15% minimum is not a replacement for all local taxes.
Why a headline corporate tax rate is not enough
The OECD’s Corporate Tax Statistics 2025 reports a 21.2% average combined statutory corporate income tax rate in 2025 across the Inclusive Framework jurisdictions covered. It reports that the average fell from 28.0% in 2000 to 21.7% in 2019, then remained broadly stable through 2025. These are statutory-rate averages, not effective rates or a forecast of what a particular business will pay.
The OECD cautions that statutory rates do not capture the full corporate tax burden: they do not show targeted regimes or the breadth of each jurisdiction’s tax base. A meaningful comparison therefore needs more than a rate. It should include the profit-base rules, deductions, incentives and the group’s own circumstances.
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How to assess a business’s exposure
- Map the jurisdictions and footprint. List places where the group has users or customers, entities, staff, assets, permanent establishments or other relevant activity. Local law determines which connections matter.
- Classify revenue by service. For each jurisdiction, compare each revenue stream with the statutory DST categories. Do not assume every revenue stream of a digital business is covered.
- Test attribution and thresholds. Apply that country’s user- or customer-location rules, group aggregation, local and worldwide thresholds, and allowances. The UK example shows why these tests must be applied separately.
- Calculate each tax on its own base. Determine DST from locally defined in-scope revenue and CIT from locally determined taxable profit. Check for special low-margin, alternative-charge or loss rules where the statute provides them.
- Check how the taxes interact. Verify local rules for deductibility, credits, treaty treatment and relief for similar taxes, as well as any Pillar Two top-up-tax effects. Do not carry the UK deductibility treatment over to another jurisdiction.
- Confirm status and effective dates. Distinguish proposed measures from enacted taxes and check the statute and tax-authority instructions for the relevant filing period. Tax Foundation Europe’s April 2026 survey reports differing European implementation and proposal statuses; use it as a cross-country overview, then verify a particular country’s position against primary national sources.
For a practical comparison across countries, record the tax base, covered services, user or customer nexus, group and local thresholds, rate, allowance, margin relief, filing and payment duties, effective date, deductibility or creditability, and interaction with minimum-tax rules. A single “DST rate” or “corporate rate” cannot resolve those questions by itself.
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