Academic Scientific JournalsFair Taxation in the Digital Age: Can the OECD Two-Pillar Solution Replace Digital Services Taxes?
Keywords:
OECD, digital services, international taxation, BEPS, Two-Pillar approachAbstract
Since the emergence of the digital economy at the turn of the 21st century, multinational companies have exploited the inadequacy of international tax regulations to avoid taxation. So far, states and international organisations have been unable to remedy the situation. In recent years, the former have taken the lead in introducing digital services taxes, allowing them to recoup some of the lost tax revenue, at the cost of unilateralism that is damaging to the international tax environment. Meanwhile, the OECD has put forward a multilateral solution aimed at preventing tax avoidance and ensuring a fair international tax system. This article aims at showing how profound an impact a digitalising economy has had on international taxation and to assess the respective merits and prospects of national as well as international solutions presented. Such an assessment is to be made in terms of both tax certainty as well as compatibility with constitutional and treaty provisions. It concludes that digital services taxes, despite serious shortcomings, have proven a necessary step until a multilateral agreement becomes enforceable. The latter remains nonetheless essential in ensuring multinational enterprises contribute their fair share of taxes.
Downloads
References
Zucman, G.: The Hidden Wealth of Nations: The Scourge of Tax Havens, University of Chicago Press, 2015.
Devereux, M. et al.: The OECD Global Anti-Base Erosion (“GloBE”) proposal, Oxford University Centre for Business Taxation, Jan. 2020. Available at: https://www.sbs.ox.ac.uk/sites/default/files/2020-02/OECD_GloBE_proposal_report.pdf, accessed: October 4th, 2023.
Döllefeld, C. et al.: Tax Administrative Guidance: A Proposal for Simplifying Pillar Two, Intertax vol. 50, no. 3 (2022).
Englisch, J. and Becker, J.: International effective minimum taxation – the GLOBE proposal World Tax Journal vol. 11, no. 4, 2019.
Hufbauer, G. & Lu, Z.: The European Union’s Proposed Digital Services Tax: A De Facto Tariff, Policy Briefs PB18-15, Peterson Institute for International Economics, 2018.
Juncker, J.-C.: A New Start for Europe: My Agenda for Jobs, Growth, Fairness and Democratic Change, 2014. Available at: https://commission.europa.eu/system/files/2019-09/juncker-political-guidelines-speech_en.pdf, accessed: October 4th, 2023.
Lawder, D. & Thomas, L.: U.S. drops tariff threat in digital tax transition deal with European countries”, Reuters.com, 2021. Available at: https://www.reuters.com/world/europe/european-countries-reach-digital-services-tax-deal-with-us-2021-10-21/, accessed: October 4th, 2023.
Ní Chasaide, N. Ireland’s tax games: the challenge of tackling corporate tax avoidance, Community Development Journal, vol. 56, no. 1, 2021.
Rappeport, A.: Finance Leaders Reach Global Tax Deal Aimed at Ending Profit Shifting, The New York Times, from June 5th, 2021.
Simić, S.: Regulation And Taxation Of Digital Services In Accordance With The Initiatives Of The European Union, Financial Law Review, vol. 24 (4), 2021. Available at: https://doi.org/10.4467/22996834FLR.21.040.15407, accessed: October 4th, 2023.
Wach, T.: Counteracting International Tax Avoidance Practices, Financial Law Review, vol. 13 (1), 2019. Available at: https://doi.org/10.4467/22996834FLR.19.004.10522, accessed: October 4th, 2023.
Zelnik, P., Toubon, J., Cerutti, G.: Création et internet [Creation and Internet], Rapport au ministre de la culture et de la communication [Report to the Minister for Culture and Communication], 2010.
Legal Acts
France:
Projet de loi de finances rectificative pour 2010 [Amending Finance Bill for 2010]
Loi n° 2019-759 du 24 juillet 2019 portant création d'une taxe sur les services numériques [2019 Law creating a tax on digital services]
EU:
Directive (EU) 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market
Directive (EU) 2019/790 of the European Parliament and of the Council of 17 April 2019 on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC
Court rulings
CJUE, C-482/18 - Google Ireland, Judgment of the Court (Grand Chamber) of 3 March 2020, Google Ireland Limited v Nemzeti Adó- és Vámhivatal Kiemelt Adó- és Vámigazgatósága
Bundeskartellamt [German Competition Authority], 08.09.2015 B6-126/14 Google/VG Media u.a.; Auseinandersetzung um das Leistungsschutzrecht des Presseverlegers
Conseil constitutionnel [Constitutional Council], décision n° 2016-744 DC du 29 décembre 2016, Loi de finances pour 2017
Other official documents
World Bank: Digital services tax: country practice and technical challenges. World Bank, Washington, DC, 2021. Available at: https://documents1.worldbank.org/curated/en/099725001112228984/pdf/P169976002e89a07209ae40d48d6ebb7154.pdf, accessed: October 4th, 2023.
European Commission, Communication: A Digital Single Market Strategy for Europe, 2015. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52015DC0192, accessed: October 4th, 2023.
European Commission, Communication: A Fair and Efficient Tax System in the European Union for the Digital Single Market, 2017. Available at: https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX%3A52017DC0547, accessed: October 4th, 2023.
European Commission, Proposal for a Council Directive on a Common Consolidated Corporate Tax Base (CCCTB), 2016. Available at: https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:52016PC0683, accessed: October 4th, 2023.
European Commission, Proposal for a Council Directive laying down rules relating to the corporate taxation of a significant digital presence; Proposal for a Council Directive on the common system of a digital services tax on revenues resulting from the provision of certain digital services, 2018. Available at: https://taxation-customs.ec.europa.eu/fair-taxation-digital-economy_en, accessed: October 4th, 2023.
European Commission, Proposal for a Council Directive on Business in Europe: Framework for Income Taxation (BEFIT), 2023. Available at: https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13463-Business-in-Europe-Framework-for-Income-Taxation-BEFIT-_en, accessed: October 4th, 2023.
OECD, Addressing the Tax Challenges of the Digital Economy, OECD/G20 Base Erosion and Profit Shifting Project, Éditions OCDE, Paris, 2014. Available at: https://doi.org/10.1787/9789264218789-en, accessed: October 4th, 2023.
OECD, Model Tax Convention on Income and on Capital 2017, April 25, 2019. Available at: https://www.oecd.org/publications/model-tax-convention-on-income-and-on-capital-full-version-9a5b369e-en.htm, accessed: accessed: October 4th, 2023.
OECD, Tax Challenges Arising from Digitalisation – Economic Impact Assessment: Inclusive Framework on BEPS, OECD/G20 Base Erosion and Profit Shifting Project, Éditions OCDE, Paris, 2020
OECD, Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy, 8 October 2021. Available at: https://www.oecd.org/tax/beps/statement-on-a-two-pillar-solution-to-address-the-tax-challenges-arising-from-the-digitalisation-of-the-economy-october-2021.pdf, accessed: October 4th, 2023.
OECD, Pillar One – Amount A: Draft Multilateral Convention Provisions on Digital Services Taxes and other Relevant Similar Measures, 2022. Available at: https://www.oecd.org/tax/beps/public-consultation-document-draft-mlc-provisions-on-dsts-and-other-relevant-similar-measures.pdf, accessed: October 4th, 2023.
OECD, Tax Challenges Arising from the Digitalisation of the Economy – Administrative Guidance on the Global Anti-Base Erosion Model Rules (Pillar Two), OECD/G20 Inclusive Framework on BEPS, OECD, Paris, 2023
OECD, “Revenue impact of international tax reform better than expected”, OECD.org, 2023. Available at: https://www.oecd.org/tax/beps/revenue-impact-of-international-tax-reform-better-than-expected.htm, accessed: accessed: October 4th, 2023.
OECD Economic Impact Assessment of The Two-Pillar Solution: revenue estimates for Pillar One & Pillar Two, 18 January 2023. Available at: https://www.oecd.org/tax/beps/economic-impact-assessment-presentation-january-2023.pdf, accessed: accessed: October 4th, 2023.
OECD Outcome Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy, 11 July 2023. Available at: https://www.oecd.org/tax/beps/outcome-statement-on-the-two-pillar-solution-to-address-the-tax-challenges-arising-from-the-digitalisation-of-the-economy-july-2023.pdf, accessed: October 4th, 2023.
Direction Générale des finances publiques, Cahier statistiques 2021 [DGFIP Report], 2021. Available at: https://www.economie.gouv.fr/files/files/directions_services/dgfip/Rapport/2021/ra_cahier_stat_2021.pdf, accessed: accessed: October 4th, 2023.
Internet Resources
Bevh: The impact of an EU digital services tax on German businesses, 2018. Available at: https://copenhageneconomics.com/wp-content/uploads/2021/12/181019-dst-report.pdf, accessed: accessed: October 4th, 2023.
KPMG:Taxation of the digitalized economy: Developments summary, 2023. Available at: https://tax.kpmg.us/content/dam/tax/en/pdfs/2023/digitalized-economy-taxation-developments-summary.pdf, accessed: October 4th, 2023.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Financial Law Review
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 Unported License.
Financial Law Review is an open access journal which means that all the articles published are freely available without charge to the reader or his/her institution.
The articles published in Financial Law Review are available under a licence Attribution-NonCommercial-NoDerivs 3.0 Unported (CC BY-NC-ND 3.0)
The Author furnishes a non-exclusive and free-of-charge license to use the his Work without territorial limitations and for an unlimited period.
Archiving policy
All texts from the journal Financial Law Review are published in electronic version. We strive to archive texts in various databases. Archival issues are also available on the platform of the Academic Scientific Journals: https://czasopisma.bg.ug.edu.pl/index.php/flr/index
Moreover articles published in the journal are archived at the Repository of the University of Gdansk.
