On Taxation of the Digital Economy. Where Are We Now and Where Are We Going?

• Published in: Finance : challenges of the future Vol. 1; no. 23; pp. 95 - 108
• Main Authors: Alin IRIMIA, Attila TAMAS-SZORA, Iulian Bogdan DOBRA
• Format: Journal Article
• Language: English
• Published: Universitaria Publishing House 01-11-2021
• Subjects: digital economy; digital service tax; global minimum tax; globalization; tax administration; transfer pricing
• ISSN: 1583-3712

This study aims to contribute to the continuing discussion about the compatibility and feasibility of the OECD/G20 October Statement. By this means, a literature review is conducted to gain appropriate considerations to the Pillar One and Two implementations. Amongst the findings are that: i) Approach Pillar 1A: This philosophy eliminates the request-demand principle and adopts a uniform approach to taxation and will allow developing countries to focus on their core activities and avoid becoming part of an open market environment; ii) As countries step up their efforts to attract more income-producing businesses, they will need to adopt more sophisticated tax systems to compete effectively. A new tax system is limited by a set of barriers that prevent it from becoming overly complex and inefficient; iii) the main reason for limiting competition is that tax administrations deliver lower-quality services to their clients. A new approach will allow tax administrations to compete more effectively; and iv) Since many tax administrations with DST income will lose what they gain due to the implementation of Pillar 1&2, the real results will need to be studied.