An Essay on International Taxation in the Digital Era: Analysis

This essay delves into the complexities of international taxation within the digital economy, highlighting the transformative impact of information and communication technologies (ICT). It examines how the rise of the digital economy has created new business models and challenges traditional tax frameworks. The essay discusses key issues such as base erosion and profit shifting (BEPS), the OECD's actions, and the arm's length principle, as well as the challenges of valuing digital services and determining where value creation occurs. It addresses the importance of adapting tax policies to the specific characteristics of the digital economy, considering factors like network effects and the role of data. The essay also touches on the emergence of digital services taxes and the need for global cooperation to address these challenges.

An Essay on International Taxation in the Digital Era

The digital economy, its business models, and its key features
Digital economy is the result of remarkable interactions introduced by data and letter innovation
(ICT). The rise of ICT has made progress cheaper, more intuitive and, more generally, improved
business measures and supported development in all sectors of the economy. For example,
retailers allow messengers to send applications online and can collect and analyze customer
information to offer personalized support and promotion; the coordination range has changed
with the ability to monitor vehicles and loads on ground areas; Money management providers are
gradually enabling consumers to process their money, manage exchanges, and access new items
online (González and Jouanjean, 2017); in aggregate, the computer economy has developed the
ability to remotely screen the creation phases and control and control the use of robots; in the
educational field, colleges, consulting administrations and other specialist management
associations can offer distance learning courses, which enable them to take advantage of global
interest; In the field of medical services, the advanced economy is enabling long-range sensing
and the use of wellness records to update the effectiveness of the facility and patient experience.
The telecommunications and media industry has been reformed, expanding its work in the news
media of non-traditional news sources and increasing consumer investment in the media through
the interplay of messenger-created and interpersonal content (Cuenca, 2021).
As the Digital economy continues to evolve into the real economy, separating the progressive
economy from the rest of the economy for payment purposes would be complicated, if not
impossible. Struggling to break away from the advanced economy as a separate domain would
undoubtedly necessitate defining what constitutes a machine and what does not (Navarro, 2020).
After all, the evaluation issues and BEPS concerns posed by the cyber economy have been
recognized and compounded by the destruction of existing buildings captured by global efforts
(MNE), as well as new action plans based on key critical events in the advanced economy and
recognizing which ones are significant points will raise or reinforce BEPS cost problems or
concerns (Schwarzer et al 2019). While several action plans for the computing economy have
interacted with conventional industry, advances in ICT have made it possible to do many types
of business at a much more prestigious scale and over longer distances than they used to be.
These include some internet businesses, online paid administrations, application stores, web-
based advertising, distributed processing, affiliate organizing rates, and fast exchanges.

The digital economy is in flux, and future technologies should have focused to determine how
they will affect tariff structures. The computer economy's rapid and revolutionary growth has
resulted in a variety of new trends and a similar reversal of events. Although the rapid pace of
change makes it impossible to predict future developments with any degree of certainty, possible
changes should be closely monitored because they can pose additional challenges for bulking
strategy designers (Agrawal and Fox, 2021). These enhancements include the Internet of Things,
referring to the emotional expansion of organized devices; significant forms of money, including
coins; advances in state-of-the-art mechanical technology and 3D printing, which can bring
manufacturing closer to buyers, changing where and how money is made within assembly supply
chains, similar to payroll production Body; the sharing economy that allows for the sharing of
goods and enterprises; greater access to government information, which may ultimately improve
accountability and enforcement, and to support outsiders in government affairs; and built
individual information security, which is accessible in the computing economy (Rukundo, 2020).
The Digital economy and its action plans highlight some key events of considerable importance
in terms of costs. These include carrying capacity, in terms of (I) the unrelated factors upon
which the information economy relies heavily, (ii) messengers, and (iii) business capabilities; the
dependence on information, widely used, is determined by the increase in processing efficiency
and capacity limit and by the reduction in the cost of collecting information; network effects,
which refer to how customer preferences can directly affect the benefit for different customers;
the distribution of action plans is multifaceted, in which several unique encounters of people
communicate through an intermediary or a platform, and the preferences of each meeting of
people influence the outcome of different encounters of people through a positive or pessimistic
aspect; a trend towards syndication or oligopoly in some action plans highly dependent on
network effects; and instability due to fewer barriers to switching to business sectors and the
rapid development of innovation, as well as the pace at which customers can decide to adopt new
items and administrations, damaging seasonal ones (Low, 2020).
OECD Work
Political pioneers, news sources, and common society across the planet have been expressing the
growing concern about spending on global corporations using gaps in the connection of various
charts- score to reduce pay or move benefits to low load regions where cash action is practically

played out. In July 2013, the Organization for Economic Co-operation and Development
(OECD) released an Action Plan on Base Erosion and Benefit Shifting (BEPS Action Plan,
OECD, 2013) in response to this problem and as part of the G20. BEPS is an acronym for
"Beginner the Action Plan outlines 15 measures to resolve BEPS in general, as well as deadlines
for completing them (Christians and Magalhaes, 2019).
Tax collection should seek to be impartial and fair across all types of business. Impartial
responsibility increases capacity by ensuring that the best specification of creative methods is
achieved. The suppression and misfortune of relative excess weight occurs when changes in
value trigger a number of changes in the organic market than would occur at no cost. The spread
of the computing economy brings a number of benefits, for example in terms of development,
business and wealth in general. At the same time, it causes a number of problems for strategy
makers. These problems extend far beyond the internal and global assessment strategy and
communications in areas such as global security law and information verification, just like
accounting and management.
As stated in the BEPS Action Plan, "the proliferation of the computing economy poses
difficulties for global tax assessment. The advanced economy is represented by an unparalleled
dependence on accessible resources, infamous use of information (very close to home
information), and a wide reception of multifaceted action plans capturing external value
generated by free items, and the difficulty of deciding the a view of where respect building is
taking place. This will raise crucial issues in how enterprises in the advanced economy value and
make their benefits, and how the computer economy recognizes with source ideas and home or
how payment is shown for cost purposes The carriage of rights is not a burden that may
encourage the collection of low taxes to largely an indication of def ormities in the conventional
framework. It is essential to look closely at how the enterprises of the computing economy add
value and cause their benefits to determine whether and how well it would be important to
change the current guidelines to consider the specific highlights of that industry and to affiliate
BEPS.
In fact, the current global accountability agreement concludes that cross-trade businesses started
with standards created in the 1920s when elements added value. Global enterprises ("MNEs") are
typically stagnant and require significant use of unprecedented manpower and resources. One of

the essential foundations of universally recognized tax assessment standards created in the past is
arm’s length principle ("ALP"). The purpose of the ALP is to distribute the benefits available to
different obligations of the multinationals depending on the results of the free third-party market
exchanges. For many years it has found the basis for evaluating the movement to spread the
benefits across multiple locations. For interchangeable exchanges that rely on impact work or
resources, the ALP is usually simple to implement in oral practice. In contrast, mental ALP
moves for deeply coordinated exchanges that are heavily dependent on unrelated resources see
BEPS Actions 8-10. Unfortunately, these accessible resources, such as calculations or sources of
information, are very important for creating computer action plans. Given the growing
importance of additional accessible resources for current action plans, the OECD has updated its
ALP approach reflecting the importance of financial models over legally binding agreements.
Be that as it may, with and with complex trading rules that consistently assess that you don't
respond well to prosecutors, see Devereux and Vella (2017). In the general population and more
among cost experts there is now a strong prediction that there may be confusion between where
the valuation of taxation from the benefit takes place and where the exercise value is useful. The
fundamental concern is that the creation of "customer" respect is due to the collection of
information located in a cost location where the organization performing a computer operation is
not actually established and exercises cannot be performed.
The Taskforce believes these standards are important to date and, presented as a basis, can
provide a basis for evaluating options for addressing the cost problems of the economy.
Similarly, the Task Force reviewed the post-Ottawa workspace and was specifically scourged by
the Technical Advisory Group on Business Profits (TAG BP) which marks the abolition of
perpetual basis (PE) benefits, instead of a strong administrative opinion and negotiation rules. in
terms of web-based business.

References
González, J.L. and Jouanjean, M.A., 2017. Digital trade: developing a framework for analysis.
Cuenca, J.S., 2021. Emerging Tax Issues in the Digital Economy.
Navarro, A., 2020. Jurisdiction Not to Tax, Tax Sparing Clauses and the Income Inclusion Rule
of the OECD Pillar 2 (GloBE) Proposal: The Demise of a Policy Instrument of Developing
Countries?. Copenhagen Business School, CBS LAW Research Paper, (20-22).
Schwarzer, J., Chen, L., Cheng, W., Ciuriak, D., Kimura, F., Nakagawa, J., Pomfret, R. and
Rigoni, G., 2019. The Digital Economy for Economic Development: Free Flow of Data and
Supporting Policies. G20 Insights. https://www. g20-insights. org/policy_briefs/the-digital-
economy-for-economicdevelopment-free-flow-of-data-and-supporting-policies.
Agrawal, D.R. and Fox, W.F., 2021. Taxing Goods and Services in a Digital Era. National Tax
Journal, 74(1), pp.000-000.
Rukundo, S., 2020. Addressing the Challenges of Taxation of the Digital Economy: Lessons for
African Countries.
Low, P., 2020. Digital services taxes, trade and development.
Christians, A. and Magalhaes, T.D., 2019. A New Global Tax Deal for the Digital Age. Can. Tax
J., 67, p.1153.