A digital services tax (DST) generally taxes gross revenue from specified digital services, often where users or customers are located. A broad corporate income tax generally applies to a wider range of a company’s activities and taxes profit after allowable costs. A DST is therefore not simply another name for corporate income tax, and its precise scope depends on the country’s law. “Broad corporate levy” is descriptive shorthand here, not a standardized tax category.
How the two taxes differ
| Comparison | Typical digital services tax | Broad corporate income tax |
|---|---|---|
| Tax base | Gross revenue from specified digital services or transactions. The OECD says DSTs generally tax gross revenues from certain services and are not considered income taxes for that reason (OECD commentary). | Net profit or income after allowable costs, subject to local rules. The OECD contrasts the DST revenue base with corporate profit (OECD economic assessment). |
| Activities covered | A defined set of digital services, often connected to users or customers in the taxing market; covered services and thresholds vary. | Generally a wider range of a corporation’s business income, as defined by local law. |
| Relationship to other taxes | Generally designed to operate alongside ordinary income tax, not replace it. Its classification for one tax framework does not determine its treatment for every treaty, domestic-law or accounting purpose (OECD commentary). | The usual broad-based tax on corporate profits; how it interacts with other taxes and credits depends on local rules. |
The practical consequence of a gross-revenue base is that covered revenue may be taxable even if the activity has a low margin or makes a loss: the tax is not calculated by first deducting all costs of earning that revenue. The final amount and any relief depend on the statute.
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What services might a DST cover?
There is no single worldwide list. Countries define covered services, thresholds and links to local users differently. To illustrate one policy framework—not a binding checklist for national laws—the OECD’s Pillar One blueprint proposed categories of automated digital services including online advertising, sale of user data, search engines, social media, online intermediation, digital content, online gaming, standardized online teaching and cloud computing (OECD Pillar One blueprint).
That blueprint also proposed excluding or distinguishing areas such as customized professional services, customized online teaching, physical goods, internet access, and ordinary online sales outside its defined automated-service categories. Those proposed boundaries do not automatically apply to a country’s DST.
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A DST is also not simply a VAT or sales tax on every digital purchase. The IMF describes DSTs as sector-specific turnover taxes and notes that definitions of taxable services vary; traditional consumption taxes have a different design (IMF paper).
Country examples show why dates matter
United Kingdom
The UK government’s original policy announcement said that a 2% tax would apply from April 1, 2020, to revenues of search engines, social media services and online marketplaces deriving value from UK users (UK government announcement). This is the original design described in that announcement, not a complete account of thresholds, reliefs or later amendments. A 2025 UK review describes the DST as a narrow-scope business tax that taxes revenues from specific digital services and as an interim measure while a global solution is pursued (UK review).
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Canada
Canada’s government describes its DST as a 3% tax on certain revenues earned by large domestic and foreign businesses engaging online users in Canada. Its status page reports that repeal legislation received Royal Assent on March 26, 2026 (Government of Canada status page). The rate describes the tax design; the Royal Assent date is the reported legal-status milestone. Check current official materials for any question about application or transition rules.
How the OECD’s global approach relates
OECD Pillar One Amount A is distinct from a DST. The OECD describes its multilateral convention as a framework to reallocate a share of profits from the largest and most profitable multinational enterprises to market jurisdictions, improve tax certainty, and remove DSTs under the convention (OECD Amount A page). That description sets out the intended architecture; it does not establish that every country has implemented a replacement or repealed its domestic tax.
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The UK’s characterization of its DST as an interim measure and Canada’s reported 2026 repeal enactment illustrate why legal status must be stated country by country and as of a date. Neither example supports a blanket claim that DSTs have ended everywhere or remain in force everywhere.
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What to check for a country-specific answer
- Which services or transactions the statute covers, and how it connects them to users or customers in that jurisdiction.
- Which businesses meet the relevant thresholds and how taxable revenue is calculated.
- Whether the DST operates alongside corporate income tax and what local rules say about credits, relief or interactions.
- The current law, effective dates and any repeal or transition provisions, using that government’s latest official materials.
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