EFFECTS OF THE DIGITALIZATION OF THE ECONOMY OVER THE ALLOCATION OF TAXING RIGHTS

Abstract

Globalization and digital economy have changed the way in which multinational enterprises (MNE’s) operate. New business models, beyond increasing tax evasion’s and tax avoidance’s risk, escape the current rules of the international tax system. This situation, whose responsibility can be attributed to both MNE’s and States, allows the most profitable companies of the world to avoid paying income tax. The BEPS Project, led by the OECD, has presented proposals for significant improvements, which could meet the interests of consumer market States and ease current distortions. Despite proposals in progress, the complexity in accomplishing a consensus-based and long-term global solution has encouraged dozens of countries to adopt unilateral measures to tax the digital economy’s MNEs.