Digital goods are software programs, music, videos or other electronic files that users download exclusively from the Internet.[1] Some digital goods are free, others are available for a fee. The taxation of digital goods and/or services, sometimes referred to as digital tax and/or a digital services tax, is gaining popularity across the globe.
The digital economy makes up 15.5% of global GDP in 2021 and has grown two and a half times faster than global GDP over the past 15 years, according to the World Bank.[2] Many of the largest digital goods and services companies are multinational, often headquartered in the United States and operating internationally. There are significant differences in corporate tax rates between countries, and multinational companies can legally use base erosion and profit shifting (BEPS) to report their profits against intellectual property held in low tax jurisdictions (tax havens) to reduce their corporation tax liabilities. This has led to many new legal and regulatory considerations. In the field of international taxation, there has been debate about whether the current rules are appropriate in the modern global economy, especially regarding the allocation of income and profits among countries and the effect of this on taxes paid in each country.[3]
Almost 50 jurisdictions have made changes in their current legislation regarding the taxation to include the digital tax, or presented new laws focused on taxation of digital economy.[4][5]
^See Music download
^"Overview". World Bank. Retrieved 2021-06-06.
^"Digital Services Tax: Why the World is Watching". Bloomberg Tax. Retrieved 2021-06-06.
^"2020 vision: Singapore set to tax cross-border digital services, following international trends". www.blog.taxamo.com. 20 November 2018. Retrieved 30 April 2019.
^"In the digital era, tax, trade and competition rules need an upgrade". World Economic Forum. 11 October 2019. Retrieved 2019-12-03.
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