Digital Services Tax (DST) and Global Trade Conflicts: Balancing Fairness and Trade Relations

Abstract

This study examines the impact of the Digital Services Tax (DST) on global trade, tax fairness, and international tax reforms. Using a qualitative approach and a Systematic Literature Review (SLR) method, the research evaluates DST’s role in addressing tax base erosion while highlighting its economic and geopolitical implications. Findings reveal that DST increases government revenues, particularly in developing nations, but also exacerbates trade conflicts and legal uncertainties, deterring Foreign Direct Investment (FDI). While the OECD’s Pillars One and Two offer a multilateral alternative, their implementation remains complex and politically contested. The study concludes that achieving a sustainable digital tax system requires a balanced, cooperative framework to mitigate trade tensions and promote tax fairness.