Global Trends in VAT/GST and Direct Taxes

S. 344I. Introduction

The digital economy is the most diversified area of global commerce. In addition to the opportunities for consumers and businesses, it has created a major challenge for the tax practitioners and academics. An understanding of the complexity of an underlying transaction does not easily offer an applicable and appropriate concept for its taxation. Furthermore, systematization and classification for tax purposes of such transactions is not always possible or may even lead to a new inconsistency in the application of existing rules and international tax standards. In particular, the area of the digital economy is influenced by the constant changes in the technologies available. Every attempt to classify the digital economy reflects only past developments and “would probably create a new obstacle in the very near future”. The attempt to find an appropriate means of taxation in VAT/GST and direct taxation remains one of the biggest challenges for law-makers around the world; on the other hand, “electronic services” are one of the fast-growing areas of electronic commerce and will create a significant field for investigation within international tax law.

In this paper the au...