The international tax landscape continues to transform rapidly in response to the twin pressures of digitalisation and profit shifting by multinational enterprises (MNEs). Many low- and middle-income countries, including Uganda, have adopted unilateral Digital Services Taxes (DSTs) as an interim measure to ensure that digitalised businesses with minimal physical presence nonetheless contribute tax where economic value is created.
These unilateral measures emerged against the backdrop of stalled consensus on a coordinated global response to the taxation of digital activities under the Organisation for Economic Co-operation and Development (OECD) and G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), Pillar Two.
However, as we enter 2026, the international tax policy environment has shifted again, notably with the recent agreement by over 145 jurisdictions on a revised global minimum tax package aimed at preserving taxing rights of jurisdictions where these MNEs operate through digitalised business models that require little or no physical presence.
This agreement does not abandon Pillar Two; rather, it modifies its application through a “side-by-side” framework that allows certain jurisdictions, most notably the United States to operate parallel domestic minimum tax regimes while still achieving the policy objective of a 15 % global minimum tax.
This article explains where DST sits in this evolving framework, clarifies key positions from earlier DST debates, and assesses the implications of the side-by-side global minimum tax agreement for both DST regimes and broader international tax cooperation.
