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Could the Global Digital Service Providers be Persuaded to Pay Their Share?

Teski, Norbert and Pulay, Gyula (2021) Could the Global Digital Service Providers be Persuaded to Pay Their Share? Public Finance Quarterly = Pénzügyi Szemle, 66 (S1). pp. 151-166. DOI https://doi.org/10.35551/PFQ_2021_s_1_8

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Official URL: https://doi.org/10.35551/PFQ_2021_s_1_8


Abstract

The emergence, rapid expansion, and globalization of digital services have significantly reshaped the worldeconomy. The rise of global digital service providers, i.e. multinational companies providing digital services in many countries around the world, is also a new challenge in terms of equitable public burden bearing. Under current tax rules, physical presence provides the legal basis for the exercise of each country’s taxing power. However, digital services do not require a physical presence. Taking advantage of this, global digital service providers do not tax their profits where they produce, but where the tax conditions are most favourable. As a result, they contribute much less to public burdens in proportion to their profits than traditional economic actors, and most of the countries concerned lose significant tax revenues. Many international organizations are looking for a solution to this inequitable situation, but no agreement has yet been reached. The solution is complicated by determining where profit-generating value creation occurs geographically. This article reviews the answers to these questions.

Item Type:Article
Uncontrolled Keywords:digitalization, equitable public burden bearing, digital value creation
JEL classification:D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
E62 - Fiscal Policy
F20 - International Factor Movements and International Business: General
F62 - Economic Impacts of Globalization: Macroeconomic Impacts
H20 - Taxation, Subsidies, and Revenue: General
H26 - Tax Evasion
Subjects:Finance
DOI:https://doi.org/10.35551/PFQ_2021_s_1_8
ID Code:8633
Deposited By: Alexa Horváth
Deposited On:11 Sep 2023 12:12
Last Modified:11 Sep 2023 12:12

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