Taxation of the digital economy and pushing fiscal boundaries

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 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. Meanwhile, in the absence of consensus and in recognition of the time that it is likely to take to agree on a workable global framework, many countries have pressed ahead and announced unilateral measures to implement their version of how the digital economy should be taxed. It will come as no surprise that these measures take a range of forms and, even where they align in concept - for example, a digital services tax - the base for taxation can differ significantly. The inconsistency of unilateral measures simply increases the complexity for businesses who seek to comply with the rules and increases the overall tax burden.

Webinar: hear the latest from the OECD and BDO tax experts

Members of BDO's global Taxation of the Digital Economy Taskforce, joined by Stewart Brant, Transfer Pricing, Digital Economy lead at the OECD who led on the Pillar One proposals, will explore:

The design issues faced by the OECD
Key themes from the consultation process
The latest OECD proposals for a 'Unified Approach' on Pillar One
Key areas of overlap between Pillar One and Pillar Two
Key themes for business.

Taxation of the Digital Economy: Latest from the OECD

Date: 3 December 2019
Time: 15:00 - 16:15 GMT / 16:00 - 17:15 CET / 10:00 - 11:15 EST
Online webinar

See the programme and register

Leading Insights – recent highlights

We have been a leading commentator to the debate on the Taxation of the Digital Economy with our opinions featured in extensively on the topic in Bloomberg Tax, Financial Times and more.

Podcast: Tax Notes reporter Ryan Finely's summary of the OECD’s pillar 2 consultation draft and BDO’s Monika Loving provides her take on the proposal
BDO has been a leading commentator to the debate on the Taxation of the Digital Economy. Read BDO International Tax Partner, Ross Robertson’s initial response to the OECD announcement of 9 October, and a leading article, published by Bloomberg Tax which explores the issues further
Read BDO's latest submission to the OECD as of 12 November 2019.
Robert Aziz, BDO Global Head of Tax, in an extract from a recent video interview below shares his perspective on What should a fair and workable global tax system look like in our modern global economy:

For any queries, please use the link to the contact form on the navigation bar or send your email to: tax@bdo.global.

Research

We are undertaking new research worldwide on the Taxation of the Digital Economy and its impact on businesses across some 40 jurisdictions.

Please use this opportunity to share your thinking, and participate in the global debate, by undertaking a short two minute survey.

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Upcoming launch of tools

We are building a set of tools which will help you assess how your business and operating models may be impacted by the advent of countries introducing measures locally.