An autonomous research institute under the Ministry of Finance


In search of a solution to tax digital economy

Publication date

Oct, 2021


NIPFP Working Paper No. 354


Suranjali Tandon


At present the international tax system is in need of reform so as to ensure that digital corporation pay taxes in countries where they operate. The search for a global solution has resulted in divergence in approaches adopted by countries. This paper delineates the fundamental economic challenges that the tax reform seeks to address, the historical evolution of tax laws and the best possible solutions given the discord between source and residence countries. The paper finds that digital services tax, with foreign credits, can offer a final global solution amenable to developing countries.
Key words: permanent establishment, digital tax, user participation, treaties, developing countries
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