Taxing Data-Driven Value Creation: A Value-Chain Analysis of China’s Digital Economy Taxation

Ruohong Liu () and Zhe Fang ()
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Ruohong Liu: Guangzhou College of Technology and Business
Zhe Fang: Guangzhou College of Technology and Business

A chapter in Proceedings of the 2026 11th International Conference on Financial Innovation and Economic Development (ICFIED 2026), 2026, pp 413-419 from Springer

Abstract: Abstract The emergence of data as a core factor of production has exposed fundamental institutional misalignments in traditional tax systems. While existing research often emphasizes platform-based digital taxes, it tends to overlook stage-specific value creation mechanisms across the data lifecycle and their interaction with tax architectures such as China’s VAT-centric system. This paper develops a data value chain decomposition framework, integrated with institutional misfit theory, to analyze tax challenges across five lifecycle stages: collection, storage, processing, transmission, and application. We identify key contradictions between each stage’s value logic and prevailing tax categories (value-added tax (VAT), corporate income tax (CIT), and personal income tax (PIT)). Because generic digital tax reforms do not adequately address these stage-specific distortions, we propose a VAT-first reform pathway that refines withholding mechanisms for cross-border data services and phases in a mark-to-market data-asset tax (DAT) under CIT, offering a pragmatic option for developing economies alongside the OECD’s Two-Pillar Solution.

Keywords: data value chain; digital economy; tax system optimization; international tax rules; digital services tax (search for similar items in EconPapers)
Date: 2026
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DOI: 10.2991/978-94-6239-642-5_41

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