Tax Challenges Arising from the Digitalisation of the Economy: the development of the OECD project and possible implementation in Russia

Abstract

The article discusses the initiatives of the Organization for Economic Cooperation and Development (hereinafter – the OECD) in the area of taxation of international groups of companies in the era of the digital economy. Methodological approaches to taxation of the digital economy are considered, the features of digitalization of the economy that play an important role for tax policy are highlighted. The digitalization of economy has caused a number of complex problems in the area of taxation, mainly related to the issue of distribution of taxing rights between states in the context of taxing income received as a result of cross-border activities.

The study is based on a comparative legal method that allows comparing similar legal problems existing in legislation and international treaties, as well as identifying optimal ways to resolve them. The following main problem of taxation of digital economy is highlighted: tax systems laid down in the 1920s traditionally took into account the principles of the source of income and residency. In the new world of globalization and the digital economy, these principles become significant obstacles to international trade. On this ground the issues of the new nexus as well as the new model of allocation of taxing rights should be established.

The analysis of the OECD two-pillar approach is brought into light. Pillar 1 deals with the reallocation of profit of multinational enterprises to market jurisdictions. Pillar 2 deals with a Global Minimum Tax.

The possible ways of implementation of the new OECD concept in Russia are also discussed in the article.