Publication: Digital Services Tax: Country Practice and Technical Challenges
Loading...
Date
2022-01-06
ISSN
Published
2022-01-06
Editor(s)
Abstract
Digital platforms are transforming social, business, and economic norms, changing theway we interact, consume, and do business. Digital technologies present many opportunitiesand benefits for society and governments. They also provide new opportunities for taxadministrations, such as prospects for better and more efficient tax collection by accessing newdata sources and improved international collaboration.
Link to Data Set
Citation
“Cebreiro-Gomez, Ana; Clavey, Colin; Estevao, Marcello; Leigh-Pemberton, Jonathan; Stewart, Benjamin. 2022. Digital Services Tax: Country Practice and Technical Challenges. Equitable Growth, Finance and Institutions Insight;. © World Bank. http://hdl.handle.net/10986/36840 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 Social Protection and Jobs Responses to COVID-19(Washington, DC: World Bank, 2022-02-07)As of January 2022, a total of 3,856 social protection and labor measures were planned or implemented by 223 economies. This constitutes a net increase of 523 measures, or 15.6 percent since the last update in May 2021. While noteworthy, such increase is the lowest among net additions observed over previous semesters. In fact, the global pace of measures’ introduction over January 2020-January 2022 has been slowing down. This report focuses on the real-time review of country measures in terms of social protection and job responses to Coronavirus (COVID-19).Publication ICTs for Regional Trade and Integration in Africa(World Bank, Washington, DC, 2014)Trade is critically important to Africa's economic prospects, as a source of revenue, investment and employment, yet Africa's trade is highly fragmented and the weakness of its trade performance constrains growth and poverty reduction. Africa today generates only about 2.5-3.5 per cent of world trade. African countries mostly export primary commodities while importing manufactured goods, from Europe, North America or developing regions outside Africa. Only about 10 per cent of Africa's trade is exchanged within the continent, a much lower proportion than in other world regions. Small domestic markets, landlocked status and limited natural resources restrict the trade potential of many countries. These structural factors inhibit the development of manufacturing sectors which could supply both African and world markets. Trade barriers are strongest at critical points along the supply chain between producers and consumers of goods and services, particularly points of entry/exit between countries.Publication International Tax Reform, Digitalization, and Developing Economies(World Bank, Washington, DC, 2019-10)While significant progress has been made in international tax cooperation, the interests of developing economies require greater priority and attention. This paper considers policy options that are currently under consideration in different international fora, drawing on the WBG's work in supporting tax policy and administration reforms in developing economies. The overall direction of the reform debate is promising and could shift taxing rights towards market jurisdictions, as well as strengthen the tools available to deter profit shifting to low-taxed entities. Some of the proposals under discussion could be adopted in the near-term but need to be better tailored to developing economy needs. This paper identifies five areas for improvement. First, the proposals relating to the allocation of global non-routine profits need to be simplified and incorporate more formulaic approaches. Second, work on the allocation of taxing rights should include in its scope the option to reallocate all non-routine profit, rather than only that part reflecting user value or marketing intangibles. Third, the (income inclusion) idea of targeting lowly taxed profits is sound, but it needs to be a tool for both capital importing and exporting countries. Fourth, detailed guidance is needed on the use of withholding tax as an efficient collection mechanism for source jurisdictions and on the application of mandatory safe harbors with an arm’s length let out. These tools can help ensure efficient administration in developing economies. And, fifth, effective administration requires appropriate access to information. Practical limitations to accessing relevant information for developing economies need to be removed. This should include an amendment to current standards allowing jurisdictions to impose robust domestic filing obligations for CBCR (and/or similar future additional reporting obligations).Publication What Does MFN Trade Mean for India and Pakistan? Can MFN be a Panacea?(World Bank, Washington, DC, 2013-06)India and Pakistan, the two largest economies in South Asia, share a common border, culture and history. Despite the benefits of proximity, the two neighbors have barely traded with each other. In 2011, trade with Pakistan accounted for less than half a percent of India's total trade, whereas Pakistan's trade with India was 5.4 percent of its total trade. However, the recent thaw in India-Pakistan trade relations could signal a change. Pakistan has agreed to grant most favored nation status to India. India has already granted most favored nation status to Pakistan. What will be the gains from trade for the two countries? Will they be inclusive? Is most favored nation status a panacea? Should the granting of most favored nation status be accompanied by improvements in trade facilitation, infrastructure, connectivity, and logistics to reap the true benefits of trade and to promote shared prosperity? This paper attempts to answer these questions. It examines alternative scenarios on the gains from trade and it finds that what makes most favored nation status work is the trade facilitation that surrounds it. The results of the general equilibrium simulation indicate Pakistan's most favored nation status to India would generate larger benefits if it were supported by improved connectivity and trade facilitation measures. In other words, gains from trade would be small in the absence of improved connectivity and trade facilitation. The idea of trade facilitation is simple: implement measures to reduce the cost of trading across borders by improving infrastructure, institutions, services, policies, procedures, and market-oriented regulatory systems. The returns can be huge, even with modest resources and limited capacity. The dividends of trade facilitation can be shared by all.Publication Liberalization of Trade in Financial Services : Lessons from Latin America and the Caribbean(2008-01-01)This policy note is based on a project on financial services and trade agreements in the Latin America and Caribbean Region. It emphasizes that the liberalization of trade in financial services is helpful to, but is not a panacea for, domestic financial system modernization. It adds that the means of liberalizing trade in financial services may also determine the extent of the benefits that can be attained and that any trade commitments in financial services will need to be aligned with China's financial system condition and policy objectives. The author points out however, that China can also draw useful policy lessons from the Latin America and Caribbean (LCR) experience when negotiating financial services in Preferential Trade Arrangement (PTAs) by firstly, the inclusion of financial services which depends greatly on the existence of offensive interests and of asymmetric bargaining powers between the negotiating counterparts; secondly, the case studies which strongly indicate the importance of initial conditions and historical experience in shaping a country's financial services trade strategy; thirdly, the scheduling approach of the (typically self-contained) financial services chapter which both contributes to, and is determined by, the willingness to liberalize; and finally the authorities should be cognizant of important nuances between the two main negotiating templates.
Users also downloaded
Showing related downloaded files
Publication Global Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-10)The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.Publication Global Economic Prospects, January 2024(Washington, DC: World Bank, 2024-01-09)Note: Chart 1.2.B has been updated on January 18, 2024. Chart 2.2.3 B has been updated on January 14, 2024. Global growth is expected to slow further this year, reflecting the lagged and ongoing effects of tight monetary policy to rein in inflation, restrictive credit conditions, and anemic global trade and investment. Downside risks include an escalation of the recent conflict in the Middle East, financial stress, persistent inflation, weaker-than-expected activity in China, trade fragmentation, and climate-related disasters. Against this backdrop, policy makers face enormous challenges. In emerging market and developing economies (EMDEs), commodity exporters face the enduring challenges posed by fiscal policy procyclicality and volatility, which highlight the need for robust fiscal frameworks. Across EMDEs, previous episodes of investment growth acceleration underscore the critical importance of macroeconomic and structural policies and an enabling institutional environment in bolstering investment and long-term growth. At the global level, cooperation needs to be strengthened to provide debt relief, facilitate trade integration, tackle climate change, and alleviate food insecurity.Publication The Container Port Performance Index 2023(Washington, DC: World Bank, 2024-07-18)The Container Port Performance Index (CPPI) measures the time container ships spend in port, making it an important point of reference for stakeholders in the global economy. These stakeholders include port authorities and operators, national governments, supranational organizations, development agencies, and other public and private players in trade and logistics. The index highlights where vessel time in container ports could be improved. Streamlining these processes would benefit all parties involved, including shipping lines, national governments, and consumers. This fourth edition of the CPPI relies on data from 405 container ports with at least 24 container ship port calls in the calendar year 2023. As in earlier editions of the CPPI, the ranking employs two different methodological approaches: an administrative (technical) approach and a statistical approach (using matrix factorization). Combining these two approaches ensures that the overall ranking of container ports reflects actual port performance as closely as possible while also being statistically robust. The CPPI methodology assesses the sequential steps of a container ship port call. ‘Total port hours’ refers to the total time elapsed from the moment a ship arrives at the port until the vessel leaves the berth after completing its cargo operations. The CPPI uses time as an indicator because time is very important to shipping lines, ports, and the entire logistics chain. However, time, as captured by the CPPI, is not the only way to measure port efficiency, so it does not tell the entire story of a port’s performance. Factors that can influence the time vessels spend in ports can be location-specific and under the port’s control (endogenous) or external and beyond the control of the port (exogenous). The CPPI measures time spent in container ports, strictly based on quantitative data only, which do not reveal the underlying factors or root causes of extended port times. A detailed port-specific diagnostic would be required to assess the contribution of underlying factors to the time a vessel spends in port. A very low ranking or a significant change in ranking may warrant special attention, for which the World Bank generally recommends a detailed diagnostic.Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.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.