The Great Challenge of globalization will be how to tax the Digital Economy.

An Action Plan to deal with the tax challenges of the Digital Economy was the topic of the meeting on the World Economic Forum 2020 and the event was attended by katharina Pistor (Edwin B. Parker Professor of Comparative law, Columbia School), Angel Gurría (Secretary-General, Organization for Economic Co-operation and Development (OECD), Bruno le Maire (Minister of Economy and Finance of France) which was the first country introduces the digital taxation in 2019, and Deila Ferreira Rubio (Chair, Transparency International) .

The Political leaders, media outlets, and civil society around the world have expressed an important concern about tax planning by multinational enterprises, having seen how the digitalization has shaken the world economy, specially because the digital economy has become the economy itself.

According with the OECD the digital economy is in a continuous state of evolution and possible future developments need to be monitored to evaluate their impact on tax systems.

One of the major concerns is about how to establish new rules in view of the current economic scenario where we do not need to be present to do business? What could be done to avoid billions dollar do not be paid legally.

Second to Delia Ferreira Rubio in some case a company that does not declare some financial transaction into this digital economy can be consider a legal act, on other hand when other companies do not declare their taxes it is related to an act of corruption.

France was the first country to impose a tax on the digital giants (GAFA Tax) in 2019. GAFA targets digital companies with global annual sales of more than 750 million euros and sales in France of at least 25 million. Although, according with the world economic forum meeting they are not discussing or talking about only the digital companies.

To establish a new regulation on taxations many question need to be answered in advance a for example who will be entitled to receive the tax: The country where the company is located or the country where the consumers are using the services?

If you would like to know more about this topic you can visit the websites bellow:

World Economic Forum : https://www.weforum.org/events/world-economic-forum-annual-meeting-2020/sessions/how-to-tax-business-in-a-digital-era

OECD/G20: https://www.oecd-ilibrary.org/docserver/9789264218789-en.pdf?expires=1602783350&id=id&accname=guest&checksum=B283899F884F13D0791328BFB9237C76

Fernanda Buharb

October 15, 2020