National Measures on Taxing the Digital Economy
By Veronica Grondona, Abdul Muheet Chowdhary, Daniel Uribe
The Organisation for Economic Co-operation and Development (OECD)’s Inclusive Framework is considering a two-pillar approach on taxing the digital economy. Preliminary estimates about the impact of its recommendations show a modest increase in corporate income tax collection, the benefits of which are expected to go mostly to the developed countries. At the same time, there is a rise in national measures on taxing the digital economy, a move spurred by the onset of the COVID-19 pandemic. This is also fully within the rights of countries under international law, despite labels of ‘unilateralism’. This research paper highlights the direct tax measures being taken by various countries and finds three key approaches to tax the digital economy: (1) digital service taxes; (2) nexus rules based on significant economic presence ;(3) withholding tax on digital transactions.
Taxing the Digital Economy to Fund the COVID-19 Response
By Abdul Muheet Chowdhary and Daniel Uribe Teran
The COVID-19 pandemic has weakened global economic growth, raising pressures on revenue authorities to fund the fiscal stimulus necessary to contain the spread of the virus and provide income support to affected households. Accordingly, countries are taking national measures to tax the digital economy as highly digitalized businesses are seeing a rise in sales, subscribers and profits owing to the work from home lockdown measures. The three main policy responses undertaken are digital service taxes, nexus rules based on significant economic presence and withholding taxes on digital transactions. These are briefly summarized here and elaborated in detail in a forthcoming research paper by the South Centre Tax Initiative (SCTI).
Will post COVID-19 pandemic lead to a climate compatible, more just, resilient and sustainable society?
By Youba Sokona
As a result of the economic shutdown and physical lockdown triggered by the COVID-19 pandemic, greenhouse gas emissions, in particular CO2, have decreased and air pollution levels have seriously dropped. However, the temporary reduction of greenhouse gas emissions resulting from the pandemic is not to be celebrated as it is not a result of deliberate climate and sustainable development policy. People who are the most vulnerable, most marginalized, and least empowered are the hardest hit by both COVID-19 and climate change. Both crises require robust scientific, evidence-based, accurate information in order to inform adequate policies and actions. They are global in nature and as such need global participation at all levels as well as strong international cooperation and transparency for their resolution.
India and recent updates on the OECD/G20 Inclusive Framework’s Two-Pillar Approach
By Subhash Jangala
The Organisation for Economic Co-operation and Development (OECD)/Group of Twenty (G20) Inclusive Framework in its January 2020 Statement has affirmed the commitment to arrive at a consensus-based solution to the tax challenges arising out of digitalization of the economy by the end of 2020 and take forward the on-going discussion on the two-pillar approach. This article examines some of the key issues in the Statement for developing countries, such as the scope, new nexus rules, role of accounting standards and proposed source rules. India’s proposal on profit attribution through a two-factor apportionment using employees and assets is mentioned as a potential option for country-wise thresholds in the new nexus.
Third Annual Developing Country Forum on South-South Cooperation in International Tax Matters (Report)
The South Centre organized, in cooperation with the Research and Information System for Developing Countries (RIS), the Ministry of External Affairs and the Ministry of Finance of India, the Third Annual Developing Country Forum on South-South Cooperation in International Tax Matters (the Forum). The Forum is an activity of the South Centre Tax Initiative (SCTI) which serves as a platform owned by developing countries to facilitate the networking and access to their officials to technical and academic resources, as well as to provide a venue for discussion among developing countries to identify collective efforts towards their participation in international tax fora and negotiations on matters of global economic governance. Discussions during the forum addressed the most relevant tax issues that may impact developing countries currently being discussed at the international level, especially in the OECD. The Forum also allowed the exchange of expertise among developing countries coming from Asia and the Pacific, Latin America and the Caribbean, and Africa, which consolidated this space as a necessary mechanism to identify coordinated positions among developing countries towards the consolidation of a network of tax officials from developing countries and strengthening their voice in the international fora.
Title: Third Annual Developing Country Forum: South-South Cooperation in International Tax Matters
Date: 9-10 December, 2019
Venue: New Delhi, India
Organizers: South Centre, Research and Information System for Developing Countries (RIS), New Delhi and Ministry of Finance, Government of India.
This update provides a snapshot of the publications and social media activities of the South Centre during the month of June 2019.