International Journal of Law


International Journal of Law
International Journal of Law
Vol. 7, Issue 4 (2021)

The challenges and proposed solutions of the taxation of digital economy


Zhengyang Fan

The revolutionary progress of the information and communication technology offers a window of opportunities to development new products and services that were not needed before, and contributes to the change of business model. More and more enterprises, especially multinational enterprises, are widely applying the Internet and digital technology in all aspects of their business. In the digital economy, the unique characteristics of the new business model poses challenges to the existing rules of international taxation, and aggravate the base erosion and profit shifting (BEPS). In October 2015, the Organization for Economic Cooperation and Development (OECD) published a series of reports on this issue, among which the Final Report on BEPS Action 1 was widely concerned for proposing countermeasures to the problems caused by the digital economy. The digital economy poses challenges to the existing rule of permanent establishments, it is undeniable that the impact of digital economy on the international taxation cannot be fully solved by simply changing the exemptions of permanent establishments.
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