How Data Should (Not) Be Taxed

13 Pages Posted: 14 Dec 2018

See all articles by Johannes Becker

Johannes Becker

University of Muenster - Institute of Public Economics

Joachim Englisch

University of Muenster - Faculty of Law

Deborah Schanz

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management)

Date Written: November 22, 2018

Abstract

The core problem with taxing the digital economy is that some business models allow firms to produce in a given country without a physical presence and, thus, avoid (adequate) source taxation in that country. This mismatch of value creation and taxation may require an adjustment of international tax standards. We analyze all major digitalisation trends as to whether and, if so, to which extent they allow for value creation without taxable nexus in the above sense. While some trends are still adequately covered by the existing set of international tax rules, others allow for remote access to local data sources and networks without being liable to source taxation. We propose a systematic and administratively feasible approach to allocating taxing rights based on what we call a sustained user relationship (SURE). We develop a conceptual framework for determining the value of production based on a SURE, emphasizing the role of observable cash flows. To conclude, we provide some tentative proposals for a staged reform.

Keywords: digital economy, business taxation, BEPS

JEL Classification: H25, F23

Suggested Citation

Becker, Johannes and Englisch, Joachim and Schanz, Deborah, How Data Should (Not) Be Taxed (November 22, 2018). Available at SSRN: https://ssrn.com/abstract=3289036 or http://dx.doi.org/10.2139/ssrn.3289036

Johannes Becker (Contact Author)

University of Muenster - Institute of Public Economics ( email )

Wilmergasse 6-8
Muenster, 48143
Germany

Joachim Englisch

University of Muenster - Faculty of Law ( email )

Universitaetsstr. 14-16
Muenster, 48149
Germany

Deborah Schanz

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management) ( email )

Ludwigstr. 28 RG IV
Munich, Bavaria 80539
Germany
+49 (0) 89 / 2180 - 3681 (Phone)
+49 (0) 89 / 2180 - 3874 (Fax)

HOME PAGE: http://www.en.steuern.bwl.uni-muenchen.de/index.html

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