Higher digital taxes coming soon: A three-part saga

November 6, 2020

Global policy around digital taxation is moving lockstep in one direction: toward higher taxes. At least three distinct policy trends intersect around the complicated issue of how to tax multinational firms at higher effective tax rates. 

In mid-October, the Organisation for Economic Co-operation and Development (OECD) released new details on how they would like to rewrite the international rules on taxing corporate profits. With no definitive OECD consensus in sight, France plans to lead the way on reimplementing its temporarily paused digital services tax. And the European Commission is doubling down on its legal actions against countries like Ireland and Luxembourg for offering “state aid” in the form of low taxes. These trends are interconnected, but each is independently setting the stage for higher taxes in the years to come.