The May 2014 report by an EU panel came up with some good, if not rather obvious conclusions relating to the overall ability of current tax law to handle transactions occurring in the so called digital economy. This whole topic is near and dear to my heart , as after 10 years in the midst of Silicon Valley, I can safely say that there isn’t much left in the world that someone within 30 miles of here has not tried to sell over the internet.
The challenges I see relate to the global inconsistency in what is the diverse, illogical and downright frustrating world of tax legislation. The reports first conclusion was:
“First: there should be a special tax regime for digital companies. Rather the general rules should be applied or adapted so that “digital” companies are treated in the same way as others.”
Well don’t get me started here folks, but don’t we treat companies differently everyday in both the tax and non-tax rules? Some good Washington lobbyists would not be impressed with this concept of no special rules. After all, the EU made wholesale changes to specially call out digital companies back in the early 2000’s with the introduction the Electronically Supplied Services Directive.
That said, I like the fact that e-commerce, BEPS and VAT are finally in the same Official Document. The next 18-24 months are going to be interesting times for consumers, tax payers and tax authorities and I suspect we are still a long way off the Utopian world of tax transparency and certainty for all.