The question on how to tax the digital economy is one of the hot topics of the moment. The OECD is giving the matter a lot of thoughts, as is the European Commission. On March 8, 2018 the Swiss State Secretariat for International Financial Matters (SIF) laid released a document in which it explained its position within the OECD on the matter.
According to the document SIF’s position on the matter is as follows:
· The taxation rules must be thoroughly reviewed. Digitisation has changed business models. Some jurisdictions have responded and already introduced unilateral measures.
· For the taxation of the digitalised economy, it is necessary to favour multilateral approaches which tax profits in the jurisdiction where added value is generated and which do not cause double or over-taxation.
· Measures outside the scope of double taxation agreements are to be avoided. These include, for example, an excise tax on digital transactions, which can lead to over- and double taxation.
· If a country wishes to introduce short-term measures – because an international consensus on long-term and definitive solutions is a long way off, for instance – they must be designed in a manner that is as targeted and as narrow as possible, be applied to both domestic and foreign companies and be limited in time (sunset clause), in order to reduce double taxation and overtaxation and minimise the negative effects on the digitalised economy, especially start-ups and SMEs. An example of such a targeted measure would be an excise tax that is limited to the digital advertising of large companies with an annual consolidated turnover exceeding EUR 750 million and that contains a sunset clause.
· Long-term measures are to be found within the framework of the existing international tax rules and the existing OECD Task Force on the Digital Economy. Binding standards are generally to be preferred over recommendations or overviews
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