“Taxation of Digital Economy- a Cross-Country Comparison”

Abstract

The rapid expansion of information and digital technologies has transformed business operations and the commerce of goods and services. This growth enables businesses to operate globally, reaching markets thousands of kilometers away without the hindrance of physical borders. Currently valued at over six trillion, the digital economy is anticipated to continue its substantial growth in the future. The digital revolution has presented challenges for global tax administrations in assessing income within their jurisdictions and collecting direct taxes and VAT from digital companies. A global debate has arisen about how and where value is created by the digital forums and whether countries where users consume digital services should be entitled to tax the income of the digital companies. The purpose of this paper is expositional as it explores how rapid growth of the digital economy has impacted traditional tax systems of different jurisdictions and how different countries of the world are attempting to tax digital companies.

Keywords: taxation of digital economy, e-commerce, digital tax, base erosion and profit shifting/BEPS, International Taxation, Digital Service Tax (DST)