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OECD - Base Erosion & Profit Shifting

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Chapter 3

OECD and G20 BEPS Action Plan: Changes to the International Tax System

• The (BEPS) Project, an ambitious plan undertaken jointly by the OECD and G20 to overhaul the global international tax system, culminated with a huge report of recommendations that, if adopted, could have a significant impact on cross-border trade.

Digital Economy

Identify the main difficulties that the digital economy poses for the application of existing international tax rules and develop detailed options to address these difficulties, taking a holistic approach and considering both direct and indirect taxation.

Issues to be examined include, but are not limited to,

1. the ability of a company to have a significant digital presence in the economy of another country without being liable to taxation due to the lack of nexus under current international rules,
2. the attribution of value created from the generation of marketable location- relevant data through the use of digital products and services,
3. the characterisation of income derived from new business models,
4. the application of related source rules, and
5. how to ensure the effective collection of VAT/GST with respect to the cross-border supply of digital goods and services.

Such work will require a thorough analysis of the various business models in this sector.

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