Submission (To OECD Task Force on the Digital Economy) Concerning Tax Challenges of Digitalization

Abstract

In regard to "Options to address the broader direct tax policy challenges", I suggest that the Task Force consider several matters:

- Practical "best practice" approaches for determining some minimal level of digital presence that would be treated as a PE. The Task Force should recommend language that individual countries could insert into their domestic laws as well as into tax treaties including appropriate provisions that would be included in the OECD and UN models and commentary.

- Begin a dialogue and consideration of applying the profit split method with standard concrete allocation factors and weightings to common business models found in the digital economy. This dialogue and consideration would include where and how these user base and accumulated data factors would be used in common models.

- Initiate some discussion of an indirect transfer issue and provide its input to the Platform for Collaboration on Tax.

Keywords: BEPS, International Tax Reform, OECD, International Tax, Formulary Apportionment, Transfer Pricing, Profit Split Method

JEL Classification: H21, H25, K34, E62