The G20/OECD Base Erosion and Profit Shifting (BEPS) Project has so far failed to find an international consensus on the tax challenges arising from digitalization of the global economy. The delay and lack of progress has led others to explore alternative paths. The European Union, in particular, has sought to lead the way in defining the problems and formulating the answers.
In this edition of the Tax Strategy & Benefits Newsletter, we consider the status of the EU’s interim and long-term proposals. We discuss the reasons for, and nature of, the opposition to those proposals that are emerging, primarily from the US. We also cover developments in three other jurisdictions – Spain, the UK and Australia – each of which have shown a willingness to act unilaterally to tax digital businesses. Finally, we provide a brief overview of the likely road ahead, emphasizing that while interim measures may ameliorate immediate public concern in the short-term, they will not resolve the long-term issue of identifying the optimal location for taxation in an ever-changing global economy.