Taxation of the digital economy
Tax professionals across our global network of EY firms can help your business navigate and thrive in the changing digital tax landscape.
What EY can do for you
EY teams are working across all the tax services including core international, indirect, global compliance and reporting, and tax policy. With people in all impacted jurisdictions, EY’s team assists clients with the following:
- Discerning, interpreting and applying a broad range of digital taxes (both direct and indirect) that are relevant to their technology and digital supply chains, including assessing whether exceptions may apply.
- Assisting clients interpret and apply the administrative application of the new laws.
- Quantifying the amount of anticipated taxation in relevant jurisdictions and, if and where required, managing compliance with the new taxes and filing the required reporting forms.
- Keeping current with the global policy landscape in this area and, as appropriate, participating in the debate with the relevant stakeholders to help shape the future policy with respect to the taxation of the digital economy.
- Understanding the impact of taxes on digital economy transactions on the company’s overall tax profile, including direct and indirect cash and tax rate computations as well as considerations related to financial statement presentation.
EY teams can assist taxpayers in assessing the cross-border and extra-territorial impact of digital economy taxes. This includes whether certain taxes may be creditable against other taxes as well as how they may interact with current withholding taxes and emerging extra-territorial taxes related to intangible property (IP) such as the UK Offshore receipts in respect of intangible property (ORIP), the US Global Intangible Low-taxed Income (GILTI) and Foreign Derived Intangible Income (FDII) regimes and other similar tax laws.
We can also assist with considerations such as controversy, supply chain management, related IP alignment and valuation issues, acquisition due diligence, as well as the financial statement considerations of the application of the range of potentially applicable digital economy taxes.
EY teams can assist taxpayers in assessing their potential tax burden on digital economy transactions and help them distinguish among digital taxes, including VATs on electronically supplied services, sales and uses taxes on digital economy transactions, new and emerging DSTs, and so-called hybrid taxes (e.g., the Indian Equalization Levy) and customs duty impacts of BEPS Pillar 1 activities, retaliation measures for DSTs and consideration of potential duties applied to electronic cross-border transactions as well as nexus expansion changes in local country laws that capture VAT or corporate income taxation on transactions that are effectuated digitally.
EY teams have the following tools available:
- The EY Global Digital Taxation Summary (pdf), which provides an overview of Digital Services Taxes (DSTs) as well as new, hybrid applications of existing taxes on purely digital transactions. Please connect with your EY account teams for a jurisdictional summary of active DSTs.
- The EY DST Analyzer tool to analyze, qualify and quantify the application of existing and new, emerging Digital Taxes.
EY teams can assist taxpayers in understanding the current and future global tax policy trends on the taxation of the digital economy, including understanding the economic impact of COVID-19 on local country tax policies (Please refer to our Global Stimulus Tracker for more details) for the digital economy and the ongoing BEPS 2.0 debate under Pillars 1 and 2. We can also assist taxpayers in staying abreast of future developments and participating in the global tax policy debate on digital taxation. For more information please visit our BEPS page.
BEPS 2.0 Modeling
EY teams have developed Pillar 1 and Pillar 2 modeling tools to estimate the impacts of the OECD Inclusive Framework’s proposals.
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