Taxation of Digital Economy and Blockchain Solutions
The spread of the digital economy poses challenges for international taxation, including consumption taxation (VAT/GST). Tax challenges arising from digitalisation, and impact of digitalisation on nexus and profit determination and allocation rules such as user participation, marketing intangibles and significant economic presence as well as blockchain solutions.
European policymakers are actively working on blockchain solutions. The European Union Science Hub published its ‘Blockchain Now and Tomorrow’ report on the state of distributed ledger technology (DLT). According to the report; the European Commission (EC) is “supporting multi-stakeholder [DLT] initiatives that gather industry, start-ups, governments, international organisations and civil society.” These initiatives cover a wide range of applications, such as accessing regulated data, real-time reporting, identity management, and supply chain.
Blockchain and its underlying distributed ledger technology (DLT) have the potential to fundamentally transform a wide range of industries and markets. Blockchain’s features can increase transparency and traceability, help to secure trust between parties, facilitate market access and improve the efficiency of transactions. The technology has clear potential, but there are also challenges to its development, including the potential for misuse and misunderstanding.