Taxation in a Global Digital Economy

1. S. 374Introduction

The digital economy is the result of a transformative process brought by information and communication technology. It has made technologies cheaper, more powerful, and widely standardised, improving business processes and boosting innovation across all sectors of the economy. It has transformed the way business is conducted, opened up new outlooks for companies and consumers, and played a major role in accelerating globalisation. The digital economy, however, has also put strains on existing tax regulations.

There are growing concerns that, due to the use of digital technology, profits are not taxed at all or are not taxed in the jurisdiction where the economic activity takes place. Those concerns are being examined within the OECD Base Erosion and Profit Shifting (BEPS) Project. While the digital economy does not create BEPS issues, it ‘exacerbates the existing ones’. These issues should be monitored closely as they may generate additional challenges for tax policy makers in the near future. The emergence of virtual currency was identified as one such concern.

Virtual currency can be defined as a type of unregulated currency existing solely in cyberspace in the form o...