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The UK’s Digital Services Tax (DST) has found itself back in the spotlight – not because of domestic criticism, but due to international trade tensions, particularly with the United States.
As part of ongoing trade negotiations, the UK is reportedly considering watering down or scrapping the DST altogether.
But why was the DST introduced in the first place, and what’s at stake if it’s removed?
The DST was introduced in April 2020 as a targeted 2% tax on the revenues of large digital businesses that make money from UK users.
This includes tech giants that operate search engines, social media platforms, or online marketplaces – companies like Google, Facebook, and Amazon.
Rather than taxing profits (which can be easily shifted to low-tax countries), the DST taxes turnover linked to UK users, making it harder to avoid.
However, it only applies to companies with global revenues over £500 million and at least £25 million from UK digital activity.
This means it’s carefully aimed at the biggest players in the market.
While the DST has raised hundreds of millions in tax revenue, it hasn’t been without controversy.
The US government has accused the UK – and other countries with similar taxes – of unfairly targeting American tech companies, arguing that it violates trade agreements and discriminates against US businesses.
In response, the US has previously threatened retaliatory tariffs. Although these haven’t materialised, they remain a real possibility.
As trade talks resume between the UK and US, the UK’s DST has become a bargaining chip.
There are reports that the UK is considering scrapping or softening the DST in exchange for smoother trade relations and a broader deal.
The future of the DST may depend on progress with the OECD’s global tax agreement – particularly Pillar One, which aims to reallocate taxing rights so that countries can tax companies where they have customers, not just where they book profits.
If that framework is implemented, many countries (including the UK) have agreed to withdraw their unilateral DSTs.
But progress at the OECD has been slow, and with elections on the horizon in several key countries, further delays are likely.
Until then, the UK government must weigh up domestic tax fairness against international diplomacy.
The UK’s Digital Services Tax was designed to ensure that tech giants pay their fair share where they operate.
But under pressure from international allies – and particularly from the US – the UK may soon reconsider its approach.
Whether the DST survives may ultimately depend on the success of broader global tax reforms.
If you have any queries about this article on Digital Services Tax, or tax matters in the United Kingdom then please get in touch.
Alternatively, if you are a tax adviser in the United Kingdom and would be interested in sharing your knowledge and becoming a tax native, then there is more information on membership here.
Tesco, the UK’s largest supermarket chain, has announced plans to slash £500 million in costs as it prepares for a new wave of business tax changes.
The move reflects a growing concern among large retailers about the fiscal direction of the UK government under Chancellor Rachel Reeves.
But what’s behind the numbers, and how do tax changes ripple through corporate decisions like this?
Tesco’s cost-cutting initiative isn’t coming out of nowhere.
The supermarket is reacting to rising wage bills, supply chain pressures, and most notably, anticipated increases in corporate taxation and regulation.
With the Chancellor signaling a shift towards raising tax revenue to support public services, businesses like Tesco are re-evaluating their internal budgets to maintain competitiveness and shareholder value.
While the details of the tax rises haven’t been fully set out, there is speculation that changes to capital allowances, business rates, or even energy levies for commercial properties may form part of the package.
The UK government has increasingly looked to large businesses to shoulder a greater portion of the tax burden, especially post-pandemic.
Corporation tax already rose to 25% in 2023 for companies with profits over £250,000.
While this may not hit all businesses equally, for a company with billions in revenue, even a few percentage points can mean hundreds of millions in additional liabilities.
Tesco’s announcement suggests that boardrooms across the UK are now preparing for more active fiscal policymaking – potentially reversing years of relative tax stability.
For consumers, this could mean further price pressures as businesses pass on costs.
For business owners, especially in retail and property-heavy sectors, it’s a reminder that corporate tax policy matters – and can influence hiring, investment, and expansion plans.
Tax changes at the top of the economy inevitably flow downward.
Tesco’s £500 million cost reduction plan is a bellwether for broader shifts in UK business taxation.
While not yet fully defined, the Chancellor’s emerging fiscal approach is already causing ripple effects among the UK’s largest employers.
Companies – and their advisers – will need to stay alert as more policy detail emerges over the coming months.
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Cyprus continues to be one of the most attractive jurisdictions in Europe for internationally minded business owners and entrepreneurs.
A key part of that appeal is the headline corporate income tax rate of 12.5% – one of the lowest in the European Union.
While Cyprus has introduced the OECD’s Global Minimum Tax (GMT) at 15% for large multinational groups, most businesses – including startups, owner-managed consultancies, and investment holding companies – will continue to pay tax at just 12.5%.
A Cyprus tax-resident company pays 12.5% corporate income tax on its worldwide income.
The rate is flat – there’s no progressive scale, no local surcharges, and no minimum alternative tax. It’s a clean, single-rate system.
Importantly, Cyprus offers a range of generous exemptions and deductions that can reduce the effective rate even further. For example:
These features make the Cyprus tax system especially well-suited to holding companies, IP-owning entities, and group financing arrangements – all operating under a mainstream, EU-compliant framework.
Cyprus has also incorporated the OECD’s Pillar Two Global Minimum Tax into its domestic law.
From 2025, this will apply to multinational enterprise (MNE) groups and large domestic groups with consolidated annual revenues over €750 million.
For those groups, Cyprus will apply a minimum effective tax rate of 15% – either through a domestic top-up tax or via the income inclusion rule.
This ensures that large MNEs pay a globally consistent rate, in line with international commitments.
It’s worth emphasising that these rules only apply to large groups meeting the €750m revenue threshold.
Smaller and mid-sized companies, including most Cyprus-based businesses and foreign-owned investment vehicles, are entirely unaffected and will continue to enjoy the standard 12.5% rate – along with all existing exemptions and incentives.
Cyprus does not impose artificial hurdles or excessive formalities.
To be tax-resident, a company must be managed and controlled in Cyprus – typically achieved by having local directors, board meetings in Cyprus, and a registered office.
For many internationally mobile founders and investors, these requirements are both manageable and cost-effective.
There’s also a solid legal and advisory framework, straightforward electronic filing, and a stable policy environment.
Cyprus has been consistent in its messaging: it remains committed to maintaining its competitive corporate tax regime, and to supporting genuine economic activity.
For internationally mobile entrepreneurs, Cyprus continues to offer a credible, compliant, and highly competitive corporate tax environment.
The 12.5% tax rate remains in place for the vast majority of businesses, supported by full exemptions for investment income, a growing treaty network, and incentives for equity and innovation.
While large multinationals will be subject to the 15% Global Minimum Tax, Cyprus has chosen to apply those rules narrowly and proportionately – without disrupting the core advantages that have made the jurisdiction so attractive to businesses worldwide
If you have any queries on this article about Corporate Tax in Cyprus, or tax matters in Cyprus more generally, then please get in touch.
Ireland has long been a magnet for multinational companies.
With its 12.5% corporate tax rate, English-speaking workforce, and EU membership, it became home to the European headquarters of major tech giants like Apple, Google, and Meta.
But global tax reform – particularly the OECD’s minimum tax initiative – is changing the rules of the game.
What does this mean for Ireland’s economy and its future as a hub for international business?
For over two decades, Ireland’s 12.5% corporation tax rate has been a key pillar of its economic policy.
It attracted foreign direct investment (FDI), created tens of thousands of jobs, and turned Dublin into a global business centre.
But critics argued that it also allowed companies to shift profits into Ireland, reducing their global tax bills and depriving other countries of revenue.
In 2021, over 130 countries – including Ireland – agreed to implement a global minimum corporate tax rate of 15% on large multinational companies (those with global revenues over €750 million).
This is known as Pillar Two of the OECD’s global tax agreement.
Ireland initially resisted the change, concerned it would reduce its competitive edge. But after securing a carve-out that allows the rate to remain at 12.5% for smaller companies, Ireland signed up.
From 2024, Ireland will apply the 15% minimum tax to large multinationals operating there.
This means that even if a company benefits from local incentives or deductions that lower its effective tax rate, a “top-up” tax will apply if the global rate falls below 15%.
This change is highly significant for Ireland. While the government expects the country to remain attractive – due to its talent, EU access, and stable legal system – some economists warn that the golden era of FDI-driven growth may cool slightly.
In response, the Irish government is focusing more on long-term, sustainable growth through infrastructure, education, and innovation, rather than relying purely on tax competitiveness.
For large companies already in Ireland, the tax bill is likely to rise slightly, especially if they were benefiting from preferential structures.
But for small and medium-sized businesses — including many Irish companies — the 12.5% rate continues to apply.
That means Ireland still offers one of the most attractive environments for smaller international businesses looking for an EU base.
Ireland’s place in the global tax landscape is evolving. It remains a strong destination for business, but the days of ultra-low tax planning through Ireland are being replaced by a more level playing field. As the OECD’s global tax framework beds in, Ireland’s future success will depend on more than just its tax rate — and that’s not necessarily a bad thing.
If you have any queries about this article on corporate tax reform, or tax matters in Ireland then please get in touch.
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The UK government is reconsidering its Digital Services Tax (DST), a 2% levy on the revenues of large tech firms such as Amazon, Facebook, and Google.
With mounting pressure from the United States and a desire to advance trade negotiations, Chancellor Rachel Reeves is reportedly open to abolishing the tax.
The implications go beyond UK coffers—they touch on international tax diplomacy and digital fairness.
Introduced in April 2020, the DST applies to companies with global revenues over £500 million, and at least £25 million from UK users.
It targets revenues from search engines, social media platforms, and online marketplaces.
The US has been vocal in its criticism, arguing that DST unfairly singles out American tech giants. In response, the UK originally agreed to withdraw the DST once the OECD’s global tax deal is fully implemented.
Reeves’ latest comments indicate that the UK may act sooner.
By scrapping the DST, the UK could appease the US and unlock trade opportunities, while also aligning with the OECD’s broader tax reforms.
While the move may smooth over transatlantic relations, it risks domestic backlash.
Critics argue that the DST, though imperfect, is one of the few tools the UK has to tax digital giants who generate significant value from UK users without paying much local tax.
There’s also the matter of timing: the UK is in a fragile fiscal position, and dropping a revenue-generating tax may raise eyebrows unless a viable replacement is in place.
If the DST is removed, it will likely be replaced by measures under the OECD’s Pillar One framework.
This would reallocate some taxing rights over digital profits to market jurisdictions like the UK, although the precise timing and mechanics remain uncertain.
The potential repeal of the UK’s Digital Services Tax underscores how global tax coordination is now influencing domestic decisions.
Whether it’s about appeasing the US or moving toward multilateralism, the DST’s days appear numbered.
If you have any queries about this article on digital services tax, or tax matters in the United Kingdom then please get in touch.
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India has announced the removal of its 6% Equalisation Levy, often referred to as the “Google Tax,” marking a significant shift in its digital tax policy.
This move comes as part of an effort to ease trade tensions with the United States and aligns with international negotiations for a global minimum tax.
But what does this mean in practical terms for India, global tech firms, and the wider international tax landscape?
The Equalisation Levy was introduced in 2016 as a 6% tax on online advertising revenues earned by non-resident digital companies.
This included giants like Google, Meta (Facebook), and Amazon.
Over time, the tax was expanded to include e-commerce services, creating friction with the US government, which argued that the levy unfairly targeted American firms.
The repeal of the Google Tax is closely tied to the Organisation for Economic Co-operation and Development’s (OECD) global tax reform deal, particularly Pillar One, which aims to reallocate taxing rights to market jurisdictions.
As countries prepare to implement this deal, the removal of unilateral digital taxes is seen as a step towards global harmony.
Additionally, the United States had threatened retaliatory tariffs on Indian exports if the tax was not scrapped.
By removing the levy, India is likely avoiding a trade dispute while signalling cooperation on international tax reform.
For companies like Google and Amazon, the repeal simplifies their tax exposure in India. It also reduces double taxation risks and improves relations with one of the world’s largest digital markets.
However, this does not mean these companies will go untaxed.
The global minimum tax deal, particularly the reallocation of profits under Pillar One, will ensure they pay a fair share in market jurisdictions like India.
There’s a valid concern that scrapping the Equalisation Levy might reduce tax collections in the short term.
However, India hopes to recoup this through the multilateral OECD deal, which will give it new rights to tax profits of large multinational enterprises operating in the country.
India’s decision to scrap the so-called Google Tax is more than a domestic tax change—it’s a signal that global tax cooperation is finally gathering pace.
While it may look like a concession to the US, it’s also a forward-looking move that aligns India with evolving global norms.
If you have any queries about this article on digital services tax, or tax matters in India then please get in touch.
Alternatively, if you are a tax adviser in India and would be interested in sharing your knowledge and becoming a tax native, then there is more information on membership here.
A former advisor to Donald Trump has labelled Ireland a “tax scam,” reigniting debate around Ireland’s corporate tax regime and its attractiveness to multinational corporations.
The comments, while blunt, reflect long-standing international concerns about tax competition and the shifting landscape of global tax rules.
Stephen Moore, a former Trump economic advisor and prominent US economist, made the remarks during a televised discussion about global taxation.
He referred to Ireland as a “tax scam country” for enabling large US multinationals to significantly lower their tax liabilities through aggressive tax planning.
His comment reflects frustrations in some US political and policy circles that companies like Apple and Google can book enormous profits in low-tax jurisdictions while paying little in their home country.
Ireland has long maintained a 12.5% corporate tax rate, one of the lowest in the EU.
Coupled with favourable rulings and intellectual property planning structures, this has made Ireland a prime location for US tech and pharma companies to base their European operations.
Although Ireland has moved to align with OECD tax transparency and anti-avoidance standards, its business model remains a contentious issue—especially for larger countries trying to protect their tax base.
Moore’s comment comes at a time when the OECD’s global tax deal, particularly the global minimum tax under Pillar Two, aims to level the playing field.
Ireland has signed up to the agreement, committing to implement a 15% minimum effective corporate tax rate for large multinationals.
This will, over time, erode some of the incentives that made Ireland such a popular tax jurisdiction. However, critics argue that enforcement will be patchy and that smaller jurisdictions will find new ways to remain competitive.
While the “tax scam” comment is clearly provocative, it highlights real tensions in the international tax system.
Ireland has benefitted enormously from its tax policies, but has also cooperated with global reforms.
The reality is more nuanced than the rhetoric.
Ireland’s role in global tax planning has long attracted scrutiny, and Stephen Moore’s recent remarks have thrown the issue back into the spotlight.
As global reforms take hold, countries like Ireland will need to find new ways to stay competitive while avoiding reputational damage.
If you have any queries about this article on corporate tax regimes, or tax matters in Ireland then please get in touch.
Alternatively, if you are a tax adviser in Ireland and would be interested in sharing your knowledge and becoming a tax native, then there is more information on membership here.
In the Netherlands, a bold new tax proposal is turning heads.
The Dutch government has announced plans to introduce a new tax on share buybacks – a move aimed at reining in what it sees as corporate excess and encouraging businesses to reinvest in their people and the economy.
It’s part of a growing global trend where governments are casting a critical eye on large, wealthy companies and asking: are they doing enough for society?
But what exactly is a share buyback?
And why does the Dutch government think it should be taxed?
Let’s say a company has made a tidy profit. Instead of using that money to build a new factory, pay workers more, or lower prices, the company decides to buy its own shares back from the stock market.
This reduces the number of shares in circulation and often pushes the price up – benefiting shareholders (including top executives) who still hold shares.
It’s a bit like a bakery using its extra cash not to hire more bakers or bake more bread, but to buy up bread tokens from the market to make existing tokens more valuable.
Critics say buybacks prioritise short-term profits and shareholders over long-term investment and workers.
Governments – including the United States and now the Netherlands – are starting to push back.
The Dutch plan would introduce a 15% tax on share buybacks, mirroring a similar approach taken by the US under President Biden’s Inflation Reduction Act, which added a 1% tax on corporate buybacks in 2023 (with plans to potentially raise it to 4%).
Dutch Finance Minister Steven van Weyenberg said the aim is to “encourage companies to reinvest profits into innovation, jobs, and sustainable practices” instead of simply enriching shareholders.
The move is also part of a broader effort to tackle inequality and the concentration of wealth.
The buyback tax would apply to large publicly listed companies and is currently expected to be introduced in 2025, subject to parliamentary approval.
Supporters say this is a fair and sensible tax that could bring in much-needed revenue while nudging companies towards more productive investment.
But opponents argue it risks making the Dutch stock market less attractive.
Critics also say companies may simply find other ways to return money to shareholders, such as dividends – which are already taxed, but usually at a lower rate depending on the country.
There’s also concern about double taxation – the company is taxed on its profits, then again when it tries to return value to shareholders.
Yes.
The United States was first out of the gate, and other countries are now watching closely.
France and Spain have floated similar ideas.
The EU has also been discussing how best to tax excess profits and corporate behaviour in a way that’s fair and sustainable.
For years, governments have struggled to tax large multinational companies in a meaningful way.
Buybacks are now in the spotlight as one more pressure point – especially when firms are reporting record profits while public services struggle and inequality grows.
The Dutch buyback tax might seem technical, but it’s part of a wider debate about the role of big business in society.
Should companies be free to do what they want with their profits – or should governments intervene to shape more equitable outcomes?
One thing is clear: the Netherlands is taking a bold step that may well inspire others.
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On March 11, 2025, the Israeli Tax Authority (ITA) released Position Paper 1/25 (the “Paper”), introducing a new interpretation of how double trigger acceleration provisions affect the tax treatment of equity awards under Section 102 of the Israeli Income Tax Ordinance (1961).
This update marks a significant shift from the ITA’s previous stance and provides greater certainty for companies and employees benefiting from equity-based compensation.
Double trigger acceleration occurs when unvested equity awards (such as stock options or RSUs) become vested due to two specific conditions being met:
Previously, the ITA’s position was that double trigger acceleration disqualified awards from the preferential tax treatment under Section 102, effectively reclassifying the income as ordinary taxable income rather than capital gains.
The new Paper reverses this position, confirming that double trigger acceleration, when pre-defined at the time of grant, does not automatically violate Section 102’s tax benefits.
A. Unvested Awards Exchanged for Future Cash Compensation
If unvested awards are converted into future cash payments upon an exit event:
If the purchaser’s share price at payment is equal to or higher than the price at transaction closing:
If the purchaser’s share price at payment is lower than at transaction closing:
If you have any queries about this article on Israeli tax treatment of double trigger acceleration, or tax matters in Israel, then please get in touch.
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With Donald Trump eyeing another term as U.S. president, the international tax landscape could face significant turbulence.
Trump’s administration has hinted at targeting countries that impose additional taxes on U.S. multinationals.
This raises concerns about retaliatory tariffs and potential conflicts over the OECD’s global minimum tax pact, which aims to ensure large companies pay at least 15% tax wherever they operate.
The OECD’s two-pillar tax reform seeks to address long-standing challenges in taxing multinational corporations.
While many countries, especially in the EU, are implementing these reforms, U.S. Republicans claim the measures unfairly target American companies.
Trump’s administration could respond with punitive tariffs, potentially triggering global economic disputes.
The US plays a crucial role in global economic stability.
A confrontational approach to international tax rules could fragment global cooperation and undermine the OECD’s efforts to harmonize tax systems.
Businesses caught in the crossfire will need robust strategies to navigate these uncertainties.
Trump’s potential return to power adds a layer of unpredictability to the already complex global tax landscape.
As the world adjusts to new tax norms, balancing domestic interests with international commitments will be key to maintaining stability.
If you have any queries about this article on Trump’s global tax war, or tax matters in the US, then please get in touch.
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