The Tax Challenges of the Digitalization of the Economy and the Search for Global Tax Fairness
Schmitz Filho, Ricardo Sergio
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The phenomenon of the digitalization of the economy is essentially characterized by the dematerialization, also described by the expression ‘scale without mass’. The development of business activities without any physical presence in a given jurisdiction where companies create value for its products or from where enterprises derive a significant income, imposes challenges on ‘where’ and ‘how’ to tax these new digitalized business models. Therefore, the article points out that these challenges are mainly connected with the need to tackle the consequent grow of opportunities for aggressive tax planning in cross-border activities, with the raise of ‘stateless income’ and the need to discuss the (re)allocation of taxing rights among ‘source’ and ‘residence’ jurisdictions. The thoughts presented seek to contribute to the aim of achieving global tax fairness and to optimize the social welfare of the global community.