Digital economy addendum

Digital economy taxation – Discussion on the existing developments, possible
alternatives and way forward

Authors: Steef Huibregtse, Louan Verdoner and Nupur Jalan

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The digital economy has changed the way in which multinational enterprises operate through a fundamental reshaping of the supply chain, value chain and markets. These developments are challenging the stability of the international tax system due to the gaps that are arises because of the inability of the current international tax system to keep up the pace with them.

The paper aims at laying down the problem of taxation of the digital economy; thereafter it discusses the progress (and implications thereof) made by various policy-making bodies like OECD, UN and EU and the targeted solutions adopted by various jurisdictions in taxing digitalized businesses and the ongoing debate surrounding it. Further, the paper also delves down into the business economics side of the problem. An attempt has been made to highlight the role of local actors of the digital ecosystem in the digital business models and how the residual portion of the profit generated because of these local actors could be allocated to a different jurisdiction in which these local actors are located.

International tax in IPSOA-Wolter Kluwer Transfer pricing manual 2021




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