Rethinking Tax for the Digital Economy After COVID-19

28 Pages Posted: 30 Jun 2020 Last revised: 10 Sep 2020

See all articles by Tarcisio Diniz Magalhaes

Tarcisio Diniz Magalhaes

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. COVID-19 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. Yet the contemporary context for excess profits taxes is fundamentally global today, in a way that excess profit taxation during the world war period was not. As such, to effectively address the fiscal crisis brought on by COVID-19, the world needs a “global excess profits tax”—a GEP tax. This article argues 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 examine the elements of such a tax and demonstrate its compatibility with currently evolving thinking about what creates profit and where.

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

Tarcisio Diniz Magalhaes

University of Antwerp Faculty of Law ( email )

Venusstraat 23
Antwerp, 2000

HOME PAGE: http://

Allison Christians (Contact Author)

McGill University - Faculty of Law ( email )

3644 Rue Peel
Montréal, Quebec

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