On 24 March the Organisation for Economic Co-operation and Development (the OECD) published its Discussion Draft on ‘Tax Challenges of the Digital Economy,’ suggesting options for overcoming the challenges, for example by modifying permanent establishment and VAT rules.
“The Draft acknowledges that it would be irrelevant to ringfence the digital economy from the rest of the economy,” explains Rui Cabrita, Lawyer at Olswang. “The OECD has focused instead on the key features of the Digital Economy as a whole that warrant attention, including mobility, the reliance on data, and the associated volatility,” adds Aredhel Johnson, Senior Associate at Squire Sanders.
A public consultation will follow on 23 April and a final report is scheduled for September. “Whatever is eventually adopted, it will be critical that countries take a coordinated approach: implementing different solutions, or the same solutions differently, could increase double taxation, and still provide areas of double non-taxation,” said Chris Hutley-Hurst, European Counsel at Skadden.