Digital Services Taxes (DSTs) are unilateral gross-receipts taxes that foreign governments impose on digital platforms’ revenues, typically ranging from two to seven percent, once they sell above a certain threshold from users in that country. The United States Trade Representative (USTR) office has previously found DSTs in countries including the United Kingdom, France, Italy, Spain, Turkey, and India to be discriminatory and burdensome. Beyond the current regimes, a growing number of jurisdictions are implementing or considering DSTs, including Poland and Brazil, with additional proposals continuing to surface across the world. The Trump Administration has made ending DSTs a priority and successfully compelled Canada to abandon their tax.
As currently structured in many jurisdictions, DSTs levy taxes on gross revenues rather than net income, which is especially punitive for high-volume, low-margin businesses like online travel platforms. Travel Tech members typically operate on slim profit margins – facilitating transactions between travelers and providers – and do not retain most of the revenue that passes through their platforms, onto travel service providers.
Travel service suppliers, like airlines and hotels, freely partner with Travel Tech members to promote and sell their quickly expiring services to a global audience. However, DSTs do not apply to these suppliers that offer direct booking on their own sites, even though they are selling the exact same fares and rooms as online travel platforms. This distorts competition by favoring vertically integrated suppliers over online travel platforms that offer consumers transparency and choice.
Further, because travel distribution is frequently cross-border, a single booking can be subject to multiple DSTs on top of ordinary income taxes, creating duplicative costs and massive compliance burdens.
To protect consumers, competition, and online travel platforms from discriminatory DSTs, Travel Tech recommends that the U.S. government:
- Affirm opposition to DSTs by initiating new Section 301 investigations and remedies.
- Pursue a multilateral solution that eliminates unilateral DSTs and ensures reciprocal treatment of U.S. companies.
- Ensure equal treatment between intermediaries and suppliers so that travel comparison platforms are not singled out for taxation while direct digital channels of airlines and hotel chains offering equivalent services are exempt.
- Embed strong digital trade commitments in trade agreements to prevent discriminatory digital taxes and safeguard U.S. competitiveness.
In its March 11, 2025 Comment Letter on Global Digital Services Taxes (DSTs), Travel Tech outlined the burdens DSTs impose on travel intermediaries—double taxation risks, compliance costs, financial strain, and lost opportunities for U.S. innovation.
In the February 7, 2025 letter to the U.S. Department of the Treasury & USTR, Travel Tech urged the administration to use all available tools (including Section 301) to counteract discriminatory DSTs, particularly as they tax revenue rather than profits and hurt travel intermediaries operating on thin margins.
In the July 24, 2024 letter to USTR on Canada’s DST, Travel Tech raised concerns that Canada’s design unfairly taxes travel technology intermediaries while exempting direct supplier portals, distorting competition and increasing costs for consumers.
Travel Tech continues to engage with policymakers to ensure fair, non-discriminatory digital tax treatment of travel distribution platforms.
