OECD issues Policy Note on taxation of the digital economy

Following the recently concluded meeting of the Inclusive Framework members in Paris, the OECD has released a Policy Note providing a road map on the BEPS Action 1- Taxation of the digital economy. Elaborate consultations on this subject have been going on in a bid to reach a wide consensus on the mode of implementation, with the crucial sticking point being the allocation of taxing rights between jurisdictions.

It is expected that a final report on the agreed position will be ready for implementation by 2020. Given the pressing nature of this subject, the delay in countries reaching a consensus and the potential tax leakages, some countries are already taking unilateral measures to address this area. Late last year, for example, the United Kingdom announced the introduction of a Digital Service Tax. Other countries may follow suit if the consultations in Paris drag on. 

Addressing the Tax Challenges of the Digitalisation of the Economy