The Superiority of the Digital Services Tax over Significant Digital Presence Proposals

Wei Cui

National Tax Journal, 2019, vol. 72, issue 4, 839-856

Abstract: Responding to calls for reallocating taxing rights over multinationals’ profits to reflect the place of user value creation, the Organisation for Economic Development and Co-operation (OECD) recently announced a Programme of Work to implement international tax reform. I use the European Commission’s (EC’s) 2018 proposal to introduce the “significant digital presence” (SDP) concept into income tax treaties as an example of the type of approach the OECD favors and argue that it is inferior to the recently proposed “digital services taxes” (DSTs). DSTs directly address the question of where profits should be allocated and taxed, while SDP proposals subordinate this vital question to superfluous treaty conventions. Global tax reform efforts need not be channeled through such conventions.

Date: 2019
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