Publication: Tax Theory Applied to the Digital Economy: A Proposal for a Digital Data Tax and a Global Internet Tax Agency
Loading...
An error occurred retrieving the object's statistics
Date
2021-03-02
ISSN
Published
2021-03-02
Author(s)
Editor(s)
Abstract
Digital technology allows businesses to operate in a country without a physical presence, which poses challenges for traditional taxation. The digital debate focuses on direct taxation and the creation of new taxing rights arising from the tax claims of market jurisdictions on income obtained by foreign digital suppliers conducting business therein without any physical presence. Tax Theory Applied to the Digital Economy analyzes the tax-disruptive aspects of digital business models and reviews current tax initiatives in light of traditional tax theory principles. The analysis concludes that market countries’ tax claims are unsubstantiated and contravene the most basic foundations of tax theory, giving rise to a series of legal, economic, tax policy, and tax administration issues that policy makers cannot overlook. The authors propose establishing a digital data tax (DDT) that is a license-type consumption tax, rather than an income tax, on the international supply of Internet bandwidth to access digital markets. The DDT can be applied either globally or unilaterally, and could become a significant source of tax revenues for market jurisdictions. It is aligned with tax principles and it does not conflict with other tax initiatives: the DDT taxes foreign digital companies as consumers, while income tax proposals tax them as suppliers. The authors also propose creating a new global Internet tax agency (GITA) under the auspices of the United Nations that would provide a neutral forum for political discussion and technical assistance in the area of digital taxation. The digital economy is a global phenomenon that requires a global solution: the creation of global taxing mechanisms and global institutions that provide technical assistance and support for successful global implementation. The book explains difficult technical concepts in plain language and contributes to the digital tax debate in a way that can be understood by anyone. Such understanding is essential to obtaining global support, achieving tax compliance, and fostering multilateral tax cooperation.
Link to Data Set
Citation
“Lucas-Mas, Cristian Óliver; Junquera-Varela, Raúl Félix. 2021. Tax Theory Applied to the Digital Economy: A Proposal for a Digital Data Tax and a Global Internet Tax Agency. © World Bank. http://hdl.handle.net/10986/35200 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Digital Transformation of Tax and Customs Administrations(Washington, DC: World Bank, 2022-06-30)Domestic resource mobilization has become a core priority of the sustainable development agenda for tax and customs administrations. Information systems can play a critical role in revenue mobilization, which may create the much-needed fiscal space for maneuver and allow for more spending on all the things that drive potential growth over the medium term. New technologies can also increase the effectiveness of the internal operations of tax and customs administrations, and can reduce costs, as they improve their capacity to collect revenue with smarter use of the information they collect. Of particular interest is machine learning, which can be used to solve difficult problems that arise from the inability of revenue administrations to process massive amounts of data efficiently. Technology by itself can only provide tools. To achieve meaningful and impactful goals, a comprehensive strategy must be defined, covering the regulatory, institutional, and operational aspects. This paper analyzes such aspects and provides a roadmap for policymakers and tax officials on how to incorporate and manage disruptive technologies into the process of building the tax and customs administrations of tomorrow.Publication COVID-19 and Taxation(World Bank, Washington, DC, 2021-04-21)The objective of this working paper is to provide guidance on the dilemma that governments are facing because of the economic crisis triggered by COVID-19. Measures adopted by governments during the contention phase to alleviate cash flow pressures on taxpayers require budget expenditures that exacerbate revenue losses from reduced tax bases. In parallel, governments are struggling with public expenditure needs that call for creating fiscal space. During this crisis there has been a significant increase in digital transactions as well as an acceleration of digital economy business models and trends. As a result, new income sources have appeared, and governments must find ways of taxing them. The first part of this paper provides guidance on practical measures that may be applied by tax authorities to strengthen cash management and alleviate cash flow constraints on taxpayers. Most of these measures are applicable primarily during the contention phase of the COVID-19 health and economic crisis, but there are others well positioned to support the recovery phase. This paper elaborates on some of the recommendations profiled in the ‘Revenue Measurements on Tax and Customs’ document produced by the Fiscal Policy and Sustainable Growth unit,2 which serves as the umbrella document for this one. The main scope of this paper is to further develop specific practical measures for improving the cash management of businesses and households faced with liquidity constraints during this period. It also provides recommendations to revenue administrations for improving compliance and receipt monitoring during the contention phase. The second part of this paper focuses on post-crisis measures that may compensate for the fiscal deficit generated by cash flow management and temporary tax relief measures. This paper is a continuation, from a cash flow management perspective, of previous World Bank Group research conducted in the areas of fiscal policy and revenue administration implications in response to the COVID-19 pandemic.Publication Revenue Administration Handbook(Washington, DC: World Bank, 2024-02-22)Revenue Administration Handbook provides a comprehensive overview of the structure and management of tax and customs administrations, covering topics such as tax policy design considerations that impact tax administration, institutional setup and strategic planning, analytical capacities and maturity models, core business processes, and tax sanctions. It also presents pioneering work in the field of digital transformation and how to build data science capabilities, including a roadmap for policy makers and tax officials on how to incorporate and manage disruptive technologies, such as machine learning, into building modern revenue administrations while taking into account their respective maturity levels. This practical manual provides examples from real-life World Bank projects so that policy makers, tax officials, information technology experts, and information and communication technology providers can better understand the needs of revenue administrations to design and implement the most appropriate technology solutions. This reference work is intended to serve as a tool to facilitate the progress and modernization of tax and customs administrations worldwide, and to reach not only tax experts and policy makers, but also other government officials, businesses and academic communities, as well as the larger public, since all are relevant stakeholders with an active role in day-to-day revenue administration operations. ------------------------- “This is a very timely and useful reference for tax practitioners and stakeholders, coming at a time when tax administrators continue to grapple with the challenge of how to accelerate the modernization of technology systems to remain effective in a rapidly advancing and technology driven business environment.” MOSES WASIKE, Senior financial management specialist, World Bank “This is an impressive piece of work that pulls together many different strains on tax administration.” JEFFREY OWENS, Director, Global Tax Policy Center, Vienna University “Applying several technologies discussed in this handbook in an innovative manner will definitely help leapfrog countries to pursue a digital transformation agenda, especially in the areas of efficiency, productivity, and citizen satisfaction.”Publication COVID-19(World Bank, Washington, DC, 2021-06-22)This note brings together current thinking among global and regional teams on governance and institutional approaches to dealing with COVID-19. With a focus on tax policy and revenue administrations, it presents governance and institutional reforms that could support revenue administration responses to the pandemic.1 COVID-19 has brought about a new normal in which work practices should change. Shocks usually trigger responses, and a productive response here will be to automate tax and customs services over the medium term and to massively accelerate the use of digital and virtual technologies.Publication El Gasto Tributario en Colombia(World Bank, Washington, DC, 2012-06-01)El presente estudio forma parte de un programa de servicios de conocimiento programático ofrecido por el Banco Mundial. El objetivo global de esta iniciativa, preparada por el Departamento de Política Pública en la región de América Latina y el Caribe (LCSPE), es el fortalecimiento de la política fiscal y del crecimien¬to económico. Uno de sus principios más importantes es la flexibilidad de su contenido, considerando las demandas del cliente. El programa está vinculado a la Alianza Estratégica entre el Gobierno de Colombia y el Banco Mundial, apoyando a un mejor gestión fiscal, financiera y del riesgo, bajo el objetivo de “creci-miento incluyente con productividad mejorada”. En términos concretos, se busca fortalecer la política fiscal, tanto en el lado del recaudo como en el del gasto. Aparte del estudio presente, se contemplan otros estudios vinculados como: (1) un análisis de la política de redistribución fiscal en Co¬lombia; (2) un estudio del sistema pensional, para apoyar al Gobierno en el proceso de preparación de la reforma pensional; (3) un ejercicio de análisis fiscal en el nivel descentralizado. Finalmente, el programa de servicios de conocimiento tiene un vínculo importante con el Préstamo Programático para Políticas de Desarrollo a favor de la Recuperación del Crecimiento y la Sostenibilidad Fiscal, cuyo objetivo es aportar a un conjunto consolidado de reformas fiscales del Gobierno.
Users also downloaded
Showing related downloaded files
Publication Pinpointing Poverty in Europe(World Bank, Washington, DC, 2016-04-13)Because the World Bank and the EU have the common objective of building competitive and sustainable economies and reducing poverty and social exclusion and because of the World Bank’s extensive experience, the EC and the Bank entered into an agreement to assist EU member states in undertaking expert analysis of census and survey data to create accurate, detailed geographical presentations of poverty. This note highlights the context and main findings of the ongoing European Commission (EC)–World Bank project, Poverty Mapping in the European Union, including the EU goals of reducing poverty and social exclusion and the difficulties of precisely identifying the poor in the EU.Publication The Philippines Detailed Assessment of Observance(World Bank and International Monetary Fund, Washington, DC, 2020-09)The BSP’s regulatory framework is broadly effective for the size and complexity of the Philippine banking system, but legislative gaps continue to hinder effective supervision of banks. The BSP has a well-resourced, experienced and highly committed staffing complement, but there is an ongoing need to develop and maintain adequate expertise in certain complex areas (e.g. risk modelling). Since the FSAP in 2002, and the assessment update in 2010, the BSP has made significant progress in enhancing the regulatory framework in a number of areas. But significant weaknesses in the legislative framework, arising notably from the bank secrecy laws and the lack of power for the BSP to supervise the parent companies and their affiliates of banking groups, present a material hindrance to effective supervision.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication World Bank Annual Report 2024(Washington, DC: World Bank, 2024-10-25)This annual report, which covers the period from July 1, 2023, to June 30, 2024, has been prepared by the Executive Directors of both the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA)—collectively known as the World Bank—in accordance with the respective bylaws of the two institutions. Ajay Banga, President of the World Bank Group and Chairman of the Board of Executive Directors, has submitted this report, together with the accompanying administrative budgets and audited financial statements, to the Board of Governors.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.