Transfer Pricing Forum
Taxation and Digitalization of the Economy

The phrase, ‘‘the world is a global village’’ was initially coined in the 1960s to reflect the growing interconnectivity of the world due to the proliferation of media technologies; and is more relevant now than ever before with digitalization transforming every aspect of our lives. It is becoming more apparent that existing international tax rules are not sufficient to meet the needs of a growing digital economy. With the evolution of business models that do not require a physical presence in the market to derive profits, multinationals now derive substantial income in jurisdictions where they have no physical presence (and therefore no tax obligations). The OECD is spearheading efforts to develop a consensus-based, long-term global solution to address these concerns.

In this issue, country practitioners provide their insight on how the tax authorities, as well as multinationals in their jurisdictions, are preparing for the anticipated OECD harmonized global approach to the digitalization of the economy. Some jurisdictions have acted unilaterally, some have made failed attempts, while some have adopted a ‘‘wait and see’’ approach. The one consistent theme is that we are in for quite a ride over the next few years, as the global efforts to address this topic are further developed and implemented.

The Transfer Pricing Forum is designed to present a comparative study of typical transfer pricing issues by Country Panelists who are distinguished transfer pricing practitioners in major and emerging industrial countries. Their discussions focus on practical questions posed by guidance, case law and practice in their respective jurisdiction, with practical recommendations whenever appropriate.

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For more on changing international tax rules, visit OECD and Taxation of the Digital Economy.