Volume 47 (2019) / Issue 12
The question of why and how to tax the digitalized economy has been at the top of the international tax policy debate since the inception of the BEPS Action Plan in 2013. Over the years, a number of approaches have been discussed including far-reaching proposals to fully or partially reallocate taxing rights to market countries. In recent months, three options have emerged at the level of the Inclusive Framework/OECD: international taxation on the basis of ‘significant market presence’, taxation according to the value of ‘user contributions’, and profit allocation to ‘marketing intangibles’. This article attempts to assess the merits of these proposals against a number of benchmarks: revenue, fairness, and efficiency. Finally, this analysis leads to a different approach: taxation on the basis of ‘digital investment’ and takes the nature of the corporate income tax as a tax on return on country-specific investment seriously while addressing the legitimate concerns and aims of the current debate.
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