- An IMF working paper on taxing cross-border digital services compares countries’ main tax tools, including VAT, digital services taxes (DSTs), nexus rules, withholding taxes, anti-base-erosion measures, and new UN treaty provisions.
- It says services now account for 27.2% of world trade, with digital delivery and conduit jurisdictions playing a growing role.
- The paper finds DSTs are usually passed on to consumers and business users, while expanded nexus rules create taxable presence without clearly solving profit allocation.
- It notes the new UN article 12AA is still disputed, with arguments over possible trade and investment impacts.
- Overall, the IMF favors broader destination-based VAT over unilateral digital taxes because it is less distortive and addresses the problem more effectively.
Source: etaf.tax
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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