Taxation of the digital economy and pushing fiscal boundaries

24 October 2019

There is a widespread - but not yet universal - view that the international tax system needs reform in order to address the digitalisation of the global economy. 2018 and 2019 have seen both the OECD and the EU publish papers on this subject, and the OECD has now, in October 2019, released its proposals on allocating profit to different countries in which an international company makes sales or derives value. This so-called “Unified Proposal” (which seeks to find consensus in other proposals put forward by OECD members) would give countries the right to tax profits of international businesses (regardless of whether they have a base in the country or not) based on calculating up to three separate pots of profit. The proposal goes beyond the arms-length principle in certain respects with a greater attribution of profit to market (i.e. customer) jurisdictions. 

Read the full World Wide Tax Alert