Tax challenges digitalization of the economy: a reflection on the BEPS Project

Abstract

The new business models are based on the digital economy, and do not require physical presence or intermediaries. They interact with consumers from different jurisdictions due to the progressive use of communication technologies and the internet, at low costs and high speed. This has led to a confrontation of the fiscal interests of nations in relation to taxing powers distribution and the
fulfillment of taxpayers’ obligations. This paper examines the implications of the digital economy on tax systems in relation to the BEPS Project: Base Erosion and Profit Sharing, promoted by the Group of Twenty (G-20) and the Organization for Economic Cooperation and Development (OECD). Through a documentary review with a descriptive analysis, it addresses tax base erosion and profit shifting, as well as the main challenges faced by tax administrations in the international context. The evidence shows an
urgent need to continuously improve the assignment of taxing power where Latin America, as well as other developing nations, could be favored by taxing income from e-commerce.