No new tax regime for digital economy

18th June 2014

MGI World No new tax regime for digital economy

The digital economy does not require a separate new tax regime, but current rules will need to be adapted to meet the demands of this growing and complex sector. This was the view of the European Commission’s (EC) expert group on how to respond to the digitisation of the global economy.

In a report that will form the basis of the European Union’s (EU) approach to the increasingly broad sector, the group argued that the need for “neutral, simplified and coordinated tax rules” are more important than ever.

Former Portuguese finance minister Vítor Gaspar, chair of the group, commented: "Digitisation opens exciting opportunities for entrepreneurs and for people in general. It also creates challenges and opportunities for tax systems and for tax administrations, which will have to adapt to the new realities.”

While the group said no separate regime is necessary, it did make a number of recommendations to reflect the way in which the digital economy is fast becoming part of the mainstream.

The destination-based VAT system for digital services could be further expanded to all goods and services in the future, while the group also recommends the removal of the VAT exemption for small consignments from non-EU countries.  

In terms of corporate taxation, the G20/OECD Base Erosion and Profit Shifting (BEPS) project will be “fundamental to tackling tax avoidance and aggressive tax planning globally”, said the report, which argues member states should adopt a common position. The group also suggested that more radical reforms of the tax system could be looked at in the future, including a destination-based corporation tax.

EU digital commissioner Neelie Kroes added: "This is no longer about a digital sector – it's about an entire economy that's going digital.” She added: ”I also welcome that the group is not just seeing digital as a challenge from a tax perspective, but also as a solution for simplification, transparency and innovation in the taxation area.”

Read more on Industry news and Europe, UK & Ireland

MGI World Big Ben picture as background with Sarah Jenkins photo, logo and text overlaid

Country insights: UK - Sarah Jenkins of MGI UK & Ireland member firm Milsted Langdon talks about current trends in the UK accounting market

12th May 2021

In the latest of our Country Insights series, Sarah Jenkins from MGI Worldwide CPAAI member firm...

MGI World Scholes firm logo

We are Delighted to Introduce Our Newest Member Scholes Chartered Accountants in Scotland to the MGI Worldwide Family!

10th May 2021

“Reliable”, “Efficient”, “Friendly”,” Innovative”, “Great Communicators”… these are all words that...

MGI World Lead image of black and white map of middle east with Turkey and UAE overlay text

How are economies faring after a challenging year? Hear from our members in Turkey and UAE as they talk of the effects of government stimulus and regulatory changes

6th May 2021

In the latest edition of the International Accounting Bulletin (IAB), Veysel Ekmen and Özcan Aksu,...