Latest ruling in US highlights importance of managing tax compliance in digital economy

On 21 June 2018, the US Supreme Court issued its highly anticipated decision in South Dakota v. Wayfair. In the context of the current debate on the taxation of the digital economy and observing the March, 2018 EC proposals this decision may have a significant impact. The case was even called the “tax case of the millennium” and will basically change not only the US sales tax landscape but will also have far-reaching implications for non-US businesses supplying goods and services to the U.S.

15 Oct. '18 Nedelina Vasilkova

Interaction with the current debate on the taxation of the digital economy

Already in 2013 the G20/OECD's BEPS Project highlighted the concerns expressed around the world about tax planning by multinational enterprises that exploits gaps in the interaction of international tax laws to artificially reduce taxable income or shift profits to low-tax jurisdictions. This is particularly relevant for the digital economy, as its business models and the features of increasing digitisation are perceived as exacerbating the profit shifting exposure. It is therefore no surprise that the OECD recently emphasized the taxation of the digital economy as the most ‘urgent’ area for attention.

The OECD is currently working on bridging the gap between different countries’ perspectives and is aiming to issue a final report on this topic in 2019 or 2020 at the latest. Recently, EU governments have agreed that tax rules should be changed to increase levies on digital services that are currently undertaxed.

Nedelina Vasilkova

Nedelina Vasilkova is an associate and applicant member of the Dutch Association of Tax Advisers (NOB)

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