Taxation in a Global Digital Economy

1. S. 4Tax Challenges Exacerbated by the Digital Economy

1.1. Features of the Digital Sector and Digital Business Models

Due to the extremely rapid development and expansion of information and communication technologies (ICTs), the way digital goods and services are supplied and distributed has been completely changed globally. The changes brought on by the advance of digital instruments such as computing devices (e.g., personal computers, smartphones, and tablets), and telecommunications networks like the Internet have been so pervasive that they have impacted all sectors of the economy and society: retail, transport, financial services, manufacturing, education, healthcare, media, etc.

The progressive dematerialisation of previously existing goods and services have also accelerated a new silent industrial revolution as modern business models do not require a physical presence where virtual or digital products are created, distributed, exchanged, and finally consumed. In this context, the digital economy has given rise to new tax challenges in terms of nexus income, characterization, and valuation created by data and user contributions.

Although the term ‘digital economy’ has been in use ...