Abstract
The digital economy started to emerge in the 1990s, driven by significant technological
innovation. The development of the digital economy has resulted in the establishment of several
influential multinational companies in the technology sector. Technology companies operating
across many countries began to discover the potential of the digital economy, which allowed
them to generate revenue regardless of their geographical market jurisdiction. International tax
policymakers initiated discussions over the implementation of tax regulations regarding the
revenue generated by the digital economy. The digital economy experienced a surge in growth
as the global COVID-19 pandemic emerged in early 2020. Global lockdown measures were
enforced in response to the COVID-19 pandemic. Society had to adapt to new lifestyles. Global
businesses were compelled to adapt their operations by using digital platforms. The impact of
these developments on the digital economy was mostly favourable, as both society and
companies were compelled to heavily depend on digital platforms. This included the adoption
of digital platforms for homeschooling children, remote work for a significant number of
workers, and the usage of digital platforms for entertainment and maintaining social
connections.
Multi-national entities in the technology sector operate globally and create revenue across
developed and developing countries. Countries worldwide have adopted one of three
approaches to enacting tax legislation for the digital economy in their respective countries: (i)
unilaterally implementing the legislation, (ii) announced/intention to implement, or (iii)
awaiting a global solution. South Africa is lagging behind and experiencing a loss in tax
revenue generated by the digital economy due to its lack of implementation of direct digital tax
legislation, although it has the intention to do so. This research conducted a qualitative approach
using a literature review to analyse the historical development of the digital economy and multinational
technology entities. The research analysed the approaches and procedures used by both
Turkey, a developed country, and Kenya, a developing country, while implementing tax
legislation on the digital economy within their respective jurisdictions. South Africa may
enhance its tax revenue by establishing a digital service tax, taking inspiration from these two
countries. While the global community continues to seek a worldwide resolution for
implementing tax legislation on the digital economy, further studies can be conducted on other
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countries, particularly developing countries, that are unilaterally implementing digital service
taxes inside their borders.
Keywords: digital economy, digital tax, digital service tax, COVID-19, Multi-National
Entities, South Africa, international tax policies, OECD, unilateral measures, developed
countries, developing countries, taxation