Tax and Technology

1. Introduction

In order to address the challenges posed by the taxation of the digital economy which highlight the obsolescence of the current international taxation system in place since the 1920s, the Organisation for Economic Co-operation and Development (OECD) and the Group of twenty (G20) have proposed a two-pillar solution. Pillar One focuses on creating a new tax nexus for multinational enterprises (MNE) whereby the lack of physical presence is not an impediment for a jurisdiction to tax said companies’ income.

This master thesis will review the latest version of the new nexus and revenue sourcing rules proposed by the OECD published in July 2022 (Model Rules) whereas the final version is not yet ready and may be subject to future modifications.

Chapter 2 examines the challenges that the digital economy has created for the current international tax system, the background of the OECD's Pillar One, and some key concepts such as Amount A, scope, and gradual implementation.

Chapter 3 focuses on new proposed nexus rules, thresholds, and some general aspects of the nexus rules to be applied.

Chapter 4 examines the proposed revenue sourcing rules, particularly analysing general rules, typ...