Digital Economy Tax
Addressing the tax challenges of the digitalizing economy has become a priority within the OECD as well as within the EU. Both the OECD and the EU have launched proposals and developments follow each other rapidly.
Politically it is clear that both the EU and other jurisdictions wants to levy more tax from ‘digital companies’. Technically, this is a challenge indeed, as the current international tax framework does not facilitate this. So far, each of the options suggested to tax digital companies has substantial downsides. They may result in arbitrary taxation, inequities, double or cascading taxes, etcetera. Moreover, it seems very difficult, if not impossible, to ring-fence the digital economy in a meaningful way.
Fundamental changes seem to be required to achieve the political goals. This could affect both digital and non-digital companies.