The Superiority of the Digital Services Tax over Significant Digital Presence Proposals
National Tax Journal 72(4), 839-856 (2019)
28 Pages Posted: 30 Jul 2019 Last revised: 25 Nov 2019
Date Written: July 26, 2019
Responding to calls for reallocating taxing rights over multinationals’ profits to reflect the place of user value creation, the OECD recently announced a Program of Work to implement international tax reform. I use the European Commission’s 2018 proposal to introduce the “significant digital presence” concept into income tax treaties as an example of the type of approach the OECD favors, and argue that it is inferior to recently proposed digital services taxes (DSTs). DSTs directly address the question of where profits should be allocated and taxed, while SDP proposals subordinate this vital question to superfluous treaty conventions. Global tax coordination deserves better focal points.
Keywords: digital services tax, significant digital presence, international taxation, tax treaties, profit attribution
JEL Classification: H21, H25, K34, M37, M48
Suggested Citation: Suggested Citation