Tax and Technology

S. 41. Introduction

The discussion related to the imposition of digital taxes has arisen in the context of the digitalization of the economy. Due to the exponential growth of technology worldwide, physical presence has become far less relevant for the purposes of business development, allowing the mobility of information technology (IT) companies and an increase in tax planning by multinational enterprises (MNEs) (among which the IT giants Google, Apple, Facebook, and Amazon stand out).

In this context, the OECD identified that the digitization of the economy could represent a major issue insofar as the existing international tax system would no longer capture the value created by these new digital business models. As a consequence, policymakers have begun to address new solutions to capture the activity of these new digital business models.

In 2015, the OECD and G20 countries adopted a 15-point Action Plan named the Based Erosion and Profit Shifting Project (BEPS Project). Afterwards, the European Union implemented many of the BEPS Project recommendations in Anti-Tax Avoidance Directives (named ATAD 1 and ATAD 2) as well as in their domestic tax law or in their double tax conventions (DT...