If the global tax agreement fails, digital tariffs might be revived.

Fears that an agreement to adopt a Global Minimum Tax (GMT) will not be enacted have brought up discussion of a Digital Service Tax (DST). It is less profitable to move operations to nations with lower tax rates as a result of a coalition of 140 nations last year agreeing to an effective 15% tax on major multinational corporations, regardless of where they are based. For instance, an online business would need to pay taxes to the government of the country where it makes considerable sales even though it has no physical presence there due to digital advertising.

The Global Minimum Tax has the support of President Biden and Treasury Secretary Janet Yellen, but they face difficulties pushing the accord through Congress. Existing tax treaties could need to be changed in order to implement the reforms, which would require a two-thirds vote and at least some GOP support. Republicans have already stated their resistance to tax increases, particularly given the current economic climate, and several legislators have voiced their opposition to the idea of transferring taxing responsibility to foreign governments.

The Czech Republic, which currently holds the rotating EU presidency, has a finance minister named Zbynek Stanjura. "I really am not able to say whether we will wait for six more months or nine more months, but I believe the longer these negotiations will take, the less of a chance of actually reaching an agreement," he said. "If we are unable to come to a long- or mid-term deal, then Europe will resume discussions regarding the digital tax."

The future: Any unilateral return to a digital service tax will probably lead to trade tensions with the U.S. at a time when both sides can least afford it. The previous EU proposal would have subjected tech behemoths like Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Meta (NASDAQ:META), and Amazon (NASDAQ:AMZN) to a number of distinct digital taxes from numerous countries, based on a threshold of annual revenues, for marketplace services and online advertising. Many people warn that this would reduce global economic competition compared to a GMT, complicate issues by requiring corporations to pay various taxes in each jurisdiction, and might even be passed on to local consumers and small businesses who use their platforms.