Tax Wars: How to End the Conflict over Taxing Global Digital Commerce

42 Pages Posted: 31 Dec 2019

Date Written: November 26, 2019


In the last two years, dozens of governments have proposed or introduced unilateral tax measures to tax foreign-based technology companies. The new tax innovations include special withholding taxes, diverted profit taxes, minimum taxes and digital services taxes. The rise of these unilateral measures threatens an international tax ‘war’ among governments that could stifle new business models or even the spread of the global digital economy. This Article reviews how international reform efforts have failed to constrain aggressive international tax planning and how the global digital tax conflict masks a growing dissatisfaction with how to tax value associated with global transactions. A coordinated solution that creates an economic presence test (a Quantitative Economic Presence Permanent Establishment) and modifies how tax revenues are divided between countries (e.g., the Residual Profit Split by Income proposal) is the best way to address these global developments.

Keywords: tax, digital commerce, BEPS, OECD, permanent establishment, profit split

Suggested Citation

Cockfield, Arthur, Tax Wars: How to End the Conflict over Taxing Global Digital Commerce (November 26, 2019). Berkeley Business Law Journal (Forthcoming), Available at SSRN:

Arthur Cockfield (Contact Author)

Queen's University - Faculty of Law ( email )

Macdonald Hall
Kingston, Ontario K7L 3N6 K7L3N6

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