Multifaceted digital economy issues remain key BEPS concern for taxpayers
First published in International Tax Review, 20 May 2014
The increased diversification of the digitised economy presents a major challenge for BEPS initiatives. Lack of a permanent establishment had led to debate over where tax should be applied, even where a digital entity is not practicing a tax avoidance strategy. The prospect of amended tax legislation to address this has raised concerns over the increased risk of double taxation and a regulatory burden on multinationals.
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A key focus within the OECD’s BEPS plan is to address the challenges associated with the digital economy. The rapid growth of the internet and online activity within business has raised a number of taxation issues, perhaps the most important of which is how to determine the location of a business’ commercial activity, the permanent establishment.