ey.com: How the OECD can head off unilateralism in taxing the digital economy

The OECD is leading efforts to alter the global tax architecture for a digital economy. Will it halt the rise of unilateral digital taxes?

In brief
  • The OECD continues to lead the charge on changing international tax rules in light of the digitalization of the economy – with a target date of mid-2021 for consensus.
  • This is taking place against a backdrop of countries introducing their own unilateral digital services taxes (DSTs), creating complexity for multinationals.
  • Organizations need to get up-to-speed on numerous potential outcomes in order to understand their potential tax exposure.

The rapid digitalization of the global economy has created exciting new opportunities for businesses to sell goods and services to anyone, anywhere in the world who has an internet connection.

One result has been the development of a vibrant, global digital services economy that has unlocked huge value. Digitalization has also created significant challenges, however, both for governments, which fear their existing tax laws don’t capture revenues related to doing business online, and for businesses, which must deal with new and uncoordinated approaches for taxing digital activity around the world.

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