DIGITAL TAXATION

Double digital taxation: what it is and how to avoid it

Governments and tax authorities are scrambling to keep pace with the increasing digitisation of the global economy and public outcry over the levels of corporate tax being paid by large multinational enterprises.

Following public pressure originating from the fact that tech giants are only paying a very small fraction of corporate tax on their online profits, countries such as Australia are introducing taxation for all companies selling their goods online (even if they have no physical presence in the market), while the EU is also considering a flat-rate tax on digital activities.

Nothing wrong in ensuring that tech giants have their profits adequately taxed. However, the new legislation risks hitting mid-sized multinational enterprises much harder, as a growing number of them have some type of e-commerce facilities.

Since physical presence is no longer the deciding factor, enterprises may end up getting taxed according to where their online clients buy their goods from and therefore be requested to register in different jurisdictions. Furthermore, tax authorities from different countries might claim the same amount of revenue, which opens up the risk of double taxation.

 

The importance of getting professional advice

Grant Thornton International have prepared a concise guide to help you navigate through the new legislation and the possible repercussions on your business.

Our multidisciplinary team of tax and legal experts is also at your disposal to guide you and answer any question you may have. Drop us a line or give us a call to book your no-obligation meeting with one of our specialists.