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Taxing Direct Sales of Digital Services: A Plea for Regulated and Internationally Coordinated Profit Splitting

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  • Wolfram F. Richter

Abstract

The employment of capital is rival in nature. Small countries do not benefit from taxing its employment. By contrast, the use of digital services is non-rival and small countries do benefit from taxing expenditures on such services. In fact, some countries have already decided to tax digital activities. If such practice spreads, the development of digital services is negatively affected. It is argued that countries exporting digital services have reason to respond by promoting an international tax regime in which the right of taxing the profit earned on the direct sales of digital services is split between the countries involved.

Suggested Citation

  • Wolfram F. Richter, 2018. "Taxing Direct Sales of Digital Services: A Plea for Regulated and Internationally Coordinated Profit Splitting," CESifo Working Paper Series 7017, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_7017
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    File URL: https://www.cesifo-group.de/DocDL/cesifo1_wp7017.pdf
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    References listed on IDEAS

    as
    1. Wolfram F. Richter, 2017. "Taxing Intellectual Property in the Global Economy: A Plea for Regulated and Internationally Coordinated Profit Splitting," CESifo Working Paper Series 6564, CESifo Group Munich.
    2. Clemens Fuest, 2008. "The European Commission's proposal for a common consolidated corporate tax base," Oxford Review of Economic Policy, Oxford University Press, vol. 24(4), pages 720-739, winter.
    3. Ligthart, J.E., 2004. "Consumption Taxation in a Digital World : A Primer," Discussion Paper 2004-102, Tilburg University, Center for Economic Research.
    4. Ciftci, Mustafa & Cready, William M., 2011. "Scale effects of R&D as reflected in earnings and returns," Journal of Accounting and Economics, Elsevier, vol. 52(1), pages 62-80, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    taxing digital services; import tax; tax exemption; profit splitting; Shapley value;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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