Digital Tax Reforms Essay

1252 Words Jul 29th, 2015 6 Pages
The objective of this paper is to argue the need for tax reforms specifically aimed at addressing global issues in an increasingly interconnected world where tax laws are not designed for the digital age. It highlights the issues faced by countries due to ‘Base Erosion Profit Shifting ‘. The emphasis is mainly on two taxes, namely, ‘Diverted Profit Tax’ and ‘Digital Goods and Service Tax’, which are recently mentioned in the Australian Budget 2015. Organisation for Economic Co-operation and Development’s (OECD) involvement to concrete changes to avoid Base Erosion Profit Shifting (BEPS) has been mentioned. UK’s ‘Google tax’ and the ‘Double Irish Dutch sandwich’ tax evading structure is explained in an effort to elucidate the steps taken by …show more content…
The present mood shows a shift from a resource-driven economy to a service-driven economy, where private investments are expected to continue to increase.
Reforms needed for the digital era Multinational companies no longer stick to the restricted area. As businesses are getting globalised, the current tax system needs to keep its pace, for Multinational companies are no longer restricted to a sphere. The current corporate tax system were apt when most taxable assets were concrete and easy to locate Technological advancements have indeed enhanced our lives in a micro and a macro level, but this has in turn lead to creation of intangible mobile assets. The government needs to grapple and make changes in the current tax system to ensure the country, the people and the businesses have a fair share in trading and enjoying complete benefits. As they were developed in a period when most tradable assets were concrete and easy to locate, the taxation systems of different countries found it fairly easy to account for these assets. But due to an emerging mobility, the taxation issues need a collective resolution from all countries. Directed Profit Tax (DPT)
Shifting profits offshore to cut tax bills has become a major issue with the multinational companies that take vain attitude to their fiscal affairs. The bigger issue is that these techniques are legal and have been adopted that occupy the ‘grey area’ justifying innovation and technological

Related Documents