Digital Services Tax: Impacts on Multinational Enterprises and Transfer Pricing Adjustments

Abstract

This paper examines the implications of Digital Services Tax (DST) on Multinational Enterprises (MNEs) and the resulting need for Transfer Pricing (TP) adjustments. It provides an overview of DST frameworks, highlights key affected sectors such as technology and e-commerce, and discusses the financial and operational impacts on MNEs. The paper also explores the relationship between DST and TP, the OECD’s Pillar One and Pillar Two proposals, and legal, regulatory, and economic challenges. Future trends in digital taxation and recommendations for MNEs regarding risk management, compliance strategies, and global tax reform advocacy are also addressed.