How to tax the digitalised economy?

This is one of the intractable problems facing individual countries and the international community.

We covered the latest developments at OECD and the European Commission (EC) at the end of September 2017 when the OECD had launched its “Request for Input” and the EC had published a draft communication. See Taxation of the Digital Economy – latest from the OECD and EC

OECD has now published the comments it received in response to its “Request for Input” and the EC has now launched an online questionnaire.

OECD Action Plan

Action 1 of the OECD BEPS (Base Erosion Profit Shifting) programme tackled the Digital Economy but its “final” report on October 2015 did not come to any conclusion re the best way to tax this part of the economy. The Digital Economy Task Force (DETF) has remained in existence and is now tasked by the G20 to come up with an Interim Report by April 2018.

OECD is holding a meeting on Wednesday 1 November, in California, to consider the issues and take stock of the various responses to its “Request for Input” which it published on 21 September for comment by 13 October.

There were more than 50 public comments on the tax challenges of digitalisation a total of 500 pages plus a 300 page Appendix with further analysis

The ICAEW Representation 111/2017 Tax challenges of the digitalised economy was submitted on 13 October and is available on our website and is also included in the OECD comments document.

European Commission

Following on from its Communication of 21 September A Fair and Efficient Tax System in the European Union for the Digital Single Market the EC has launched an online questionnaire Fair taxation of the digital economy for comment by 3 January 2018.

It seems a little disingenuous to suggest, as the EC does, that the questionnaire can be completed in 20 minutes. For organisations like ICAEW which needs to consult with its members and research and analyse the situation before coming up with realistic answers to the questions the final completion of the questionnaire may only take 20 minutes but giving a meaningful answer will take rather more time than that.

Any readers who have views on this topic please get in touch with Ian Young