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.
EY has assembled a team working across the core international, indirect, global compliance and reporting, and tax policy practices. With people in all key jurisdictions, EY’s team assists clients with the following:
- Identifying, 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 requirements under 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 particular 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 matters, supply chain management, related IP alignment and valuation issues, and acquisition due diligence, as well as the financial statement considerations with respect to 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).
We can also assist with 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 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 the countries' participation in the ongoing BEPS 2.0 debate under Pillars 1 and 2 and the implications of post-COVID-19 economic conditions for local country tax policies. We can also assist taxpayers in staying abreast of future developments and participating in the global tax policy debate on digital taxation.
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. Please connect with your EY account teams for more information or a demo of one or both of these tools.