Taxing the Digitalising Economy
Image credit: © Tax Justice Network, pxhere
During 2019 and 2020, governments of over 130 countries, led by the OECD and G20, are considering radical reforms to international rules that shape the taxation of multinational companies. Originally a response to the political outcry when it was reported that large companies such as Google and Facebook pay little tax in many countries in which they operate, it has become an agenda for potentially radical reform to adapt a century-old set of tools to the 21st century economy. ICTD’s work on this topic supports research and debate to help low-income countries navigate a fast-paced and technically complex agenda with a lot at stake.
If you would like to suggest material for our list of key resources or contribute a piece of commentary, please get in touch with us at info@ictd.ac
Blogs:
April 2021
The Biden Administration’s proposal On March 31, the Biden Administration proposed, as part of its “Made in America” tax proposals, a 21% minimum tax on affiliates of US-owned multinationals operating in countries around the world. Under the proposal, if a US-owned company operating in a foreign jurisdiction were to succeed, perhaps through avoidance devices or…
October 2020
When work on the taxation of the digital economy kicked off as part of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project in late 2018, there seemed to be a broad agreement that international tax rules needed an overhaul to successfully tax billion dollar tech giants like Amazon, Google and Facebook. Key to this…
News and Events:
January 2021
News
Since 2013, the formal structure of global corporate tax policymaking at the OECD has changed. Decisions are no longer made by 37 OECD members, but by 137 countries from all regions and levels of development through the ‘Inclusive Framework’. Official documentation emphasises that all countries participate on an ‘equal footing’, but some participants and observers…
18 December 2020
Past Event
A virtual roundtable discussion on deepening the inclusiveness of global tax negotiations. Since 2013, the formal structure of global corporate tax policymaking has changed. Decisions are no longer made by 37 OECD members, but by 137 countries from all regions and levels of development through the OECD/G20 ‘Inclusive Framework’ (IF) on Base Erosion and Profit-Shifting…
Key Resources:
Policy Documents
Intergovernmental Organisation
Briefing for the ministers on taxing the digital economy and the global tax debateProduced by the AU Secretariat and ATAF ahead of an AU Extraordinary Specialized Technical Committee (STC) on Finance, Monetary Affairs, Economic Planning and Integration
See resource Intergovernmental Organisation
Update on work on taxation issues related to the digitalization of the economyContains the proposal for a new article 12B covering automated digital services for inclusion in the UN model tax convention, as well as comments on the proposal
See resource Intergovernmental Organisation
Tax Challenges Arising from Digitalisation – Economic Impact AssessmentUpdated estimates of the economic impact from the proposed Pillars One and Two under negotiation in the Inclusive Framework
See resource Intergovernmental Organisation
Tax Challenges Arising from Digitalisation – Report on Pillar Two BlueprintA summary of the outcome of negotiations and oustanding issues related to Pillar Two, a proposal to create new rules based on the notion of a global minimum tax
See resource Intergovernmental Organisation
Tax Challenges Arising from Digitalisation – Report on Pillar One BlueprintA summary of the outcome of negotiations and oustanding issues related to Pillar One, a proposal to reallocate taxing rights in response to the challenges of digitalisation
See resource Intergovernmental Organisation
Technical review of the draft article 12B United Nations model tax conventionComments on the proposal under consideration by the UN tax committee for a new article in its model tax treaty covering automated digital services
See resource Intergovernmental Organisation
Suggested Approach to Drafting Digital Services Tax LegislationA template for African countries considering imposing a new tax on digital services unilaterally
See resource Intergovernmental Organisation
Coronavirus (Covid-19): Update on OECD tax workThe OECD has provided an update on how global negotiations to address the tax challenges arising from digitalisation will continue amidst the coronavirus emergency.
See resource Intergovernmental Organisation
OECD Secretary-General Tax Report to G20 Finance Ministers and Central Bank GovernorsThe OECD’s progress report to the G20 setting out work completed and open questions on its large-scale global digital tax reform project.
See resource Intergovernmental Organisation
OECD presents analysis showing significant impact of proposed international tax reformsInitial impact assessments from the OECD indicate that proposed solutions to the tax challenges arising from the digitalisation of the economy could raise global tax revenues by USD 100 billion annually.
See resource Intergovernmental Organisation
ATAF’s opinion on the Inclusive Framework Pillar One (including the Unified Approach) and Pillar Two proposals to address the tax challenges arising from the digitalisation of the economyThis document sets out areas in which the organisation representing African tax authorities supports OECD proposals, and where it has concerns.
See resource Intergovernmental Organisation
Public comments received on the Global Anti-Base Erosion (GloBE) Proposal under Pillar TwoA compilation of submissions to the OECD in response to its proposals related to minimum taxes, outlined in the Inclusive Framework’s May 2019 Programme of Work.
See resource Intergovernmental Organisation
Public comments received on the OECD Secretariat Proposal for a "Unified Approach" under Pillar OneA compilation of submissions to the OECD in response to its proposal for taxing corporate profits outlined in the Inclusive Framework’s May 2019 Programme of Work.
See resource Intergovernmental Organisation
The Global Anti-Base Erosion (GloBE) Proposal - Pillar TwoThis is the second of two consultation documents published by the OECD secretariat. Its proposed set of rules would allow countries to tax multinational companies where they do not already pay a minimum amount of tax.
See resource Intergovernmental Organisation
International Tax Reform, Digitalization, and Developing EconomiesThis World Bank discussion paper considers the needs of developing countries in the area of taxing the digitalisating economy, and discusses different options for reform
See resource Intergovernmental Organisation
An Assessment of Global Formula ApportionmentA working paper by IMF staff that assesses the impact of sharing out companies’ taxable profits through various formulae. Although this is not a proposal under active consideration, the results are relevant to ‘Amount A’ in the OECD’s proposed unified approach for ‘Pillar One’ of its tax and digitalisation project.
See resource Intergovernmental Organisation
Secretariat Proposal for a “Unified Approach” under Pillar OneThis is the first of two consultation documents published by the OECD secretariat. It aims to reconcile the three proposals for taxing corporate profits outlined in the Inclusive Framework’s May 2019 Programme of Work.
See resource Intergovernmental Organisation
3rd Technical Note: Inclusive Framework proposals to address the tax challenges arising in Africa from the digitalisation of the economyA response from the ATAF Cross-Border Tax Technical Committee to the issues raised in the Inclusive Framework’s programme of work. The note identifies some specific areas of concern as well as topics requiring further consideration.
See resource Intergovernmental Organisation
Programme of Work to Develop a Consensus Solution to the Tax Challenges Arising from the Digitalisation of the EconomyPaper summarising agreement reached at the OECD Inclusive Framework during the first half of 2019, including three options for reform that respond to the proposals set out in January.
See resource Intergovernmental Organisation
The place of Africa in the shift towards Global Tax Governance: Can the taxation of the digitalised economy be an opportunity for more inclusiveness?Commentary on the OECD discussions from the African Tax Administration Forum, which discusses how African countries can make more effective use of the inclusive Framework.
See resource Government
Report on Profit Attribution to Permanent EstablishmentsA proposal from the Indian government to reform its approach to taxing multinational companies, in a manner consistent with the G-24 proposal tabled three months earlier.
See resource Intergovernmental Organisation
Tax Issues related to the Digitalization of the EconomyA paper by the UN tax committee's subcommmitee on taxation of the digital economy that offers a commentary on the discussions at the OECD's Inclusive Framework and their implications for developing countries.
See resource Intergovernmental Organisation
Public comments received on the possible solutions to the tax challenges of digitalisationA compilation of submissions to the OECD in response to its paper on Addressing the Tax Challenges of the Digitalisation of the Economy, as well as video from a public consultation held at its headquarters in Paris.
See resource Intergovernmental Organisation
Corporate Taxation in the Global EconomyIMF board paper that discusses the strengths and weaknesses of a number of proposals for reforming international corporate tax rules and their implications for developing countries.
See resource Intergovernmental Organisation
Addressing the Tax Challenges of the Digitalisation of the Economy: Public Consultation DocumentPaper summarising agreement reached at the OECD Inclusive Framework to consider radical reforms to international tax rules, and outlining a number of proposals from developed and developing countries.
See resource Intergovernmental Organisation
2nd Technical Note: Inclusive Framework proposals to address the tax challenges arising in Africa from the digitalisation of the economyThe ATAF secretariat’s summary of the three proposals in the OECD’s public consultation document, and a discussion of how African countries can work through ATAF to respond.
See resource Intergovernmental Organisation
Addressing the Tax Challenges of the Digitalisation of the Economy – Policy NoteShort paper summarising agreement reached at the OECD Inclusive Framework to consider radical reforms to international tax rules, and outlining a number of proposals from developed and developing countries.
See resource Intergovernmental Organisation
Proposal for Addressing Tax Challenges Arising from DigitalisationProposal to reform international tax rules from a group of developing countries, led by India, Colombia and Ghana, aimed at influencing discussions in the OECD's Inclusive Framework.
See resource Intergovernmental Organisation
1st Technical Note: The tax challenges arising in Africa from the digitalisation of the economyThis document sets out the position of ATAF’s Cross-Border Tax Technical Committee ahead of the OECD Inclusive Framework meeting at which the broad direction of travel was agreed.
See resource Intergovernmental Organisation
Fair Taxation of the Digital EconomyA package of measures proposed by the European Commission focused on the challenges being considered by the OECD, including both a long term solution compatible with OECD tax rules, and a controversial interim solution that was disliked by some EU members as well as by the United States.
See resource Intergovernmental Organisation
Tax Challenges Arising from Digitalisation – Interim Report 2018Report endorsed by the OECD's Inclusive Framework, including developing as well as developed countries, which gives a conceptual framework explaining why digitalisation challenges existing tax rules, and proposes to reach an agreed solution by 2020.
See resource Intergovernmental Organisation
Addressing the Tax Challenges of the Digital Economy, Action 1 - 2015 Final ReportThe final report from the OECD's 'BEPS' project's workstream on the digital economy. This report emphasises that digitalisation is a transformation across the economy, rather than limited to a few large technology firms. It doesn't give a solution to the problems identified.
See resource Intergovernmental Organisation
Protecting the Tax Base in a Digital EconomyChapter from a UN tax committee handbook discussing the challenges of tax planning by highly digitalised firms from a developing country perspective.
See resource Intergovernmental Organisation
Action Plan on Base Erosion and Profit ShiftingThe work programme for the OECD's 'BEPS' project between 2013 and 2015, which was intended in part to address the difficulties face dby governments taxing large digitalised businesses.
See resource Intergovernmental Organisation
Addressing Base Erosion and Profit ShiftingThe report that launched the OECD's 'BEPS' project, in part a response to the public controversies surrounding tax planning by large digital firms.
See resource Government
Report of the Task Force on Taxation of the Digital EconomyA report for the French government that discussed the ways in which highly digitalised business models differ from conventional business models, and how international tax rules could adapt.
See resourceCommentary
Academic
The Taxation of the Digitalised Economy: An African StudyThis paper is a case study of taxing the digitalised economy in six African countries, namely Nigeria, Ghana, Senegal, Kenya, Rwanda, and Uganda.
See resource Civil Society
What Is at Stake for the Mining Sector in the Global Digital Tax Reforms?This analysis provides an overview of the key issues at stake for the mining sector and mining countries in global digital tax reforms, surveying the potential impacts of the OECD’s Pillar I and Pillar II.
See resource Academic
Preliminary Analysis of KPMG Transfer Pricing Study for OECD Digital Tax ProposalThis study analyses the design of so-called “Amount B” under the OECD’s proposed model for Pillar 1, discussing a recent KPMG study finding little need for country-specific adjustments to marketing and distribution returns.
See resource Civil Society
A Pyrrhic victory for the OECD?The Tax Justice Network critically assesses recent progress in the OECD/G-20 digital tax project and projects potential scenarios for the future.
See resource Academic
The OECD Global Anti-Base Erosion (“GloBE”) proposalThis paper looks at the OECD’s Global Anti-Base Erosion (GloBE) proposal, providing a policy analysis and looking at the effects on revenues and incentives. It also looks at the potential constraints placed by EU law on the design of the GloBE proposal.
See resource Academic
Corporate Tax Negotiations at the OECD: What’s at Stake for Developing Countries in 2020?This paper describes the proposals for corporate tax reform under consideration at the Inclusive Framework and highlights some of the issues for developing countries.
See resource Academic
Addressing the Challenges of Taxation of the Digital Economy: Lessons for African CountriesThis paper examines legislative and policy approaches to taxing the digital economy adopted by different jurisdictions around the world and the lessons that African countries can draw from these experiences.
See resource Academic
The EU Commission’s digital tax proposals and its cross-platform impact in the EU and the OECDThis analysis shows how the digital tax agenda has been pushed into the global political spotlight by the political activism of the European Commission.
See resource Civil Society
ICRICT response to the OECD Consultation on Global Anti-Base Erosion Proposal (“GloBE”) The Independent Commission for the Reform of International Corporate Taxation responds to the OECD’s “GloBE” proposal, urging a high minimum rate and strong enforcement
See resource Civil Society
Where next for global taxing rights?Slides and videos from a virtual conference debating the Inclusive Framework reforms
See resource Academic
Digitalization and Developing CountriesTax Notes Talk podcast episode with Martin Hearson and David D. Stewart, discussing how the OECD’s work on taxation of the digital economy affects developing countries.
See resource Civil Society
Taxing Intangibles, Financial Technology (FinTech) and the Digitalised EconomyMaterials from the 7th Pan-African Conference on Illicit Financial Flows in Nairobi, which focused on taxing the digitalised economy.
See resource Civil Society
International Corporate Tax Reform: towards a fair and comprehensive solutionThis paper gives a perspective on the OECD’s Programme of Work from the Independent Commission for the Reform of International Corporate Taxation
See resource Academic
Global inequalities in taxing rights: An early evaluation of the OECD tax reform proposalsThis paper provides an evaluation of the redistribution of taxing rights associated with the leading proposals of the OECD, IMF and the Independent Commission for the Reform of International Corporate Taxation (ICRICT).
See resource Civil Society
International Corporate Tax Reform and The ‘New Taxing Right’A summary of the detailed discussions that took place at a workshop on 4-5 July attended by senior officials from the OECD and the UN Tax Committee and from several tax authorities in Africa, as well as twelve BMG members and other researchers.
See resource Academic
Re-Allocation of Taxing Rights for Big Data Business ModelsAn alternative proposal for international tax reform that incorporates digitalisation without explicitly seeking to redistribute the tax base
See resource Media
Africa demands taxing rights on digital economyA summary of the ATAF High-Level Tax Policy Conference on the theme “Ensuring Africa’s voice in the debate on taxing the digital economy”.
See resource Academic
Taxing the Digitalised Economy: Closing in on ReformVideos from a conference at the Said Business School, in which participants from international organisations, governments, businesses and academia discussed the challenges of taxing digitalised multinationals.
See resource Media
A rare chance to fix the global corporate tax systemOp-ed from the co-chair of the Independent Commission for the Reform of International Corporate Taxation arguing for radical reform through the Inclusive Framework discussions.
See resource Media
Is Africa equipped to tax its digital economy?Interview with Michael Hewson, Director of an African Transfer Pricing Advisory Firm, on taxing the digital economy in Africa.
See resource Civil Society
The greatest opportunity for reallocating taxing rights in a generation: now or never for the OECDCommentary on the OECD discussions from a campaign group that urges radical reform to give developing countries a greater share of the tax base from multinational companies.
See resource Academic
Residual Profit Allocation by IncomeA proposal for corporate tax reform originally drafted before the OECD’s “Unified approach” was published in October 2019, but on which the OECD proposal appears to draw.
See resource Media
Corporate Taxation in the Global EconomyBlog by the Managing Director of the IMF to coincide with the launch of its paper on 'Corporate Taxation in the Global Economy'. Available in عربي, 中文, Español, Français, 日本語, Português, Русский.
See resource Academic
The Digital Services Tax as a Tax on Location-Specific RentA proposal for treating the challenges of taxing the digital economy in a similar way to the taxation of oil, gas and mining industries.
See resource Business
Taxing the Digital Economy – Why is Africa not getting its fair share?Discussion from a South African accountancy and business advisory firm of the digital taxation debate and the OECD process from an African perspective.
See resource Business
Business Principles for Addressing the Tax Challenges of the Digitalizing EconomyA set of principals from the main business lobby group at the OECD designed to influence discussions in the Inclusive Framework.
See resource Media
How Apple Sidesteps Billions in TaxesOne of the first and most influential media articles discussing the tax planning strategies of large digital companies.
See resource Media
Google 2.4% Rate Shows How $60 Billion Is Lost to Tax LoopholesOne of the first and most influential media articles discussing the tax planning strategies of large digital companies.
See resource