Rethinking Tax for the Digital Economy After COVID-19

25 Pages Posted: 30 Jun 2020 Last revised: 21 Aug 2021

See all articles by Tarcísio Diniz Magalhães

Tarcísio Diniz Magalhães

University of Antwerp Faculty of Law

Allison Christians

McGill University - Faculty of Law

Date Written: June 26, 2020


Before COVID-19 arrived, policymakers from around the world were busy working on the makings of a new global tax consensus to reflect structural changes in the world economy as a result of the rise of digitalization. The pandemic disrupted this process by delivering a shock that resulted in major contractions for most firms even as it created enormous windfalls for others, prompting some to call for excess profits taxes, usually associated with wartime economies, as a corrective. But an excess profit or windfall tax designed during the world war period is not effective in today’s globalized and digitalized economy. To address effectively the fiscal crisis and tackle the challenges of the digital economy in a sustainable way, the world needs a “global excess profits tax”—a GEP tax. This article demonstrates that the vocabulary, the technical tools, and the political determination that were being built for the digital economy can and should be adapted to formulate a GEP tax. We establish the core elements of such a tax and demonstrate its compatibility with currently evolving thinking about how to tax highly digitalized firms.

Keywords: taxation, excess profits, digitalization, OECD, BEPS, Pillar 1, Pillar 2, windfalls

JEL Classification: D63, D78, E62, F23, F42, H20, H25, H87, K33, K34, O19, O34, O38

Suggested Citation

Diniz Magalhães, Tarcísio and Christians, Allison, Rethinking Tax for the Digital Economy After COVID-19 (June 26, 2020). 11 Harvard Business Law Review (2021), Available at SSRN: or

Tarcísio Diniz Magalhães

University of Antwerp Faculty of Law ( email )

Stadscampus, Venusstraat 23, Office S.V.255
Antwerp, 2000

HOME PAGE: http://

Allison Christians (Contact Author)

McGill University - Faculty of Law ( email )

3644 Peel Street
Montreal H3A 1W9, Quebec H3A 1W9

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