Abstract
Traditional business models have been revolutionised by the internet. It is no longer necessary for companies to have a physical presence in the countries where they conduct business. Without a physical presence, however, the current international tax system has no way of fairly taxing the digital income earned in the source country. The purpose of this study is to assess the effectiveness of the OECD base erosion and profit shifting (BEPS) Action Report in efficiently taxing the digital economy. The OECD project on BEPS, introduced in 2015, proposed recommendations on domestic law and double tax convention measures to address, amongst others, the tax challenges of the digital economy. The study examines the background and history that led to the OECD BEPS project as well as the OECD’s intention behind the project. The BEPS project marks a significant shift in the amount of taxes paid by digital multinational companies, which had hitherto not been under any legal obligation to pay higher taxes. The study assesses the potential impact of these OECD BEPS recommendations, specifically focusing on taxation of the digital economy, and determines whether these recommendations will effectively address the tax challenges of the digital economy.
M.Com.