Reaching consensus on taxing the digitalized economy

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The item Reaching consensus on taxing the digitalized economy represents a specific, individual, material embodiment of a distinct intellectual or artistic creation found in International Bureau of Fiscal Documentation.
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Summary: The international community has agreed to work together to address the tax challenges presented by the rapid growth of digital business. This article takes us through the measures proposed by the OECD to address this problem. The proposals are divided into two "pillars". Pillar one looks at how taxing rights on income generated from cross-border activities in the digital age should be allocated among countries. Here three different proposals - user participation, marketing intangibles and signicant economic presence - have been put forward, but need to be narrowed down. The second pillar is the "global anti-base erosion" (GloBE) proposal, which seeks to address the continued risk of profit shifting to entities subject to low or zero taxation, as some countries think that the base erosion and profit shifting (BEPS) measures to date do not go far enough. This type of profit shifting is a particular problem in the digital economy in relation to profits relating to intangibles, but it also causes problems more broadly, such as where group entities are financed with equity capital and generate profits from intra-group financing or similar activities

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Summary: The international community has agreed to work together to address the tax challenges presented by the rapid growth of digital business. This article takes us through the measures proposed by the OECD to address this problem. The proposals are divided into two "pillars". Pillar one looks at how taxing rights on income generated from cross-border activities in the digital age should be allocated among countries. Here three different proposals - user participation, marketing intangibles and signicant economic presence - have been put forward, but need to be narrowed down. The second pillar is the "global anti-base erosion" (GloBE) proposal, which seeks to address the continued risk of profit shifting to entities subject to low or zero taxation, as some countries think that the base erosion and profit shifting (BEPS) measures to date do not go far enough. This type of profit shifting is a particular problem in the digital economy in relation to profits relating to intangibles, but it also causes problems more broadly, such as where group entities are financed with equity capital and generate profits from intra-group financing or similar activities