Researchers from Tax Law Department are authoring a report on corporate taxation and digitalization for the World Economic Forum.
The increasing digitalization of the economy in a context of reduced significance of borders have put the way multinational companies are taxed around the world under stress. While previously, companies were mainly taxed on where they were physically carrying out their business, this principle is not entirely adequate anymore. Since significant parts of global economic activity has moved to the internet (where of course physical locations do not really matter anymore), new principles for taxation are needed.
For several years now, international organizations such as the Organization for Economic Cooperation and Development (OECD), the International Monetary Fund (IMF), the United Nations (UN) and many other stakeholders have proposed and discussed ideas for reforms.
Despite the relevance of the topic for a broad audience (taxation lies at the heart of our societies), these discussions are often hard to follow for non-experts due to very technical vocabulary used and the myriad of different stakeholders involved.
Last spring, the World Economic Forum (WEF) has brought together around 30 stakeholders to work on a white paper aiming at explaining these debates in an understandable way. The forum appointed Irma Mosquera Valderrama, associate professor at the department for tax law at Leiden Law School, and Frederik Heitmüller, PhD candidate in the same department, as lead authors for the project.
The result can be accessed here.
The paper explains how developments in the global economy have led to problems in corporate taxation, what different proposals for change consist in and they present the positions and opinions by many different stakeholders such as businesses, civil society organizations, tax advisory firms, international organizations, governments and academics.
Rather than being exhaustive on all details, this paper aims at providing an easy entry for anyone new to the topic and help navigating the landscape of actors and ideas involved in reform processes.