Taxation in a Global Digital Economy

1. S. 26The Digital Economy Circumventing the Existing Tax Rules

The mass adoption of digital services by consumers, enterprises, and governments, better defined as digitalization, is stimulating economic growth, but it is also creating a big challenge for governments and policy makers to impose taxes. For the latter, the digital economy represents an unpredictable revolution that must also be monitored very closely in order to identify and tackle future challenges that will eventually arise with the constant development of digital technologies. The current tax rules have generated certain weaknesses, creating opportunities for Base Erosion and Profit Shifting (BEPS). For that reason, a united front led by the OECD and the G20 countries have developed an ambitious and comprehensive plan on addressing BEPS called the BEPS Report. This report encompasses 15 Actions dealing with providing a solution to tackle opportunities for taxpayers to undertake BEPS strategies.

Updating the OECD Model Tax Convention (OECD MC) represents one of the main objectives of the BEPS initiative, seeking to properly address the main issues that are constantly affecting cross-border transactions. These transaction...