In my last post I wrote about how any system that’s based on rules brings uncertainty – and that’s certainly true of the international tax system.
The beta blog
< The beta blog | 30 Nov 2015
One of the knock-on effects of digital technology is that it’s pushing us away from traditional employment and towards a network of self-employed relationships – what is often referred to as the ‘gig economy’. Digital technology is especially adept at matching people to opportunities; from Uber drivers and Airbnb members to ebay traders, work isn’t what it used to be.
I’ve written in the past about the challenges of applying industrial-age tax rules to digital age businesses. It’s one of the biggest problems the tax authorities face, but recently the debate in the press has focused on whether digital businesses pay the right amount of tax, rarely do these articles talk about the difficulty that businesses in general, and digital businesses in particular, have in interpreting those rules to calculate the right amount of tax.
The BEPS Digital Economy Report provides a good summary of how the international tax system developed and why the digital economy causes tensions. It deals with the concern that the international tax rules cannot cope with the new types of businesses which are being created in response to the internet and, in particular, the mobile internet.
As the competition for online consumer spend intensifies, it’s inevitable that new routes to market, distribution channels and payment mechanisms will evolve as suppliers seek out new and innovative ways of reaching as many potential customers as possible and develop
For the digital aspects of publishing, tax is important to content sourcing and customer supply. Additionally, identifying the economic owner of intellectual property (IP) is challenging but essential in assessing who should be taxed on the returns made on IP.
With the birth and explosion of ecommerce, is location still a consideration for retail? For some aspects, such as taxation, location can still make a difference for digital businesses. The EU is currently tackling the location debate when it comes to VAT (value-added tax) and customs duty on small value consignments.
A couple of weeks ago, I wrote about the challenges of adapting the international tax regime to the digital age. One of the biggest issues that will have to be tackled is around the location of income.
Digital technology has changed – and continues to change – our lives. It’s also changed how businesses operate in fundamental ways. But is there really such as thing as a separate, and distinct, ‘digital business’?
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