Developing Countries’ Perspectives on the Digitalization of the Economy―Focusing on the U.N. Initiatives―

Developing countries have a strong interest in the international taxation, particularly how to address taxation issues related to the digitalization of the economy, to satisfy the fiscal needs under the Sustainable Development Goals (SDGs), which are targeted for achievement in 2030. In exploring a new taxation approach to address taxation issues raised by the digitalization of the economy, developing countries emphasize that the due consideration should be given to a fair allocation of tax revenue, a simple design of taxation system, and administration capacity of developing countries. In order to achieve a worldwide consensus on how to address those taxation issues, it is essential to develop the solutions that reflect developing countries’ perspectives and conditions. This article examines the background of developing countries’ position on this matter and how the U.N. Model Tax Convention which reflects the developing countries’ international taxation policy, has addressed this matter thus far. This article also examines the relationship between taxation and trade/investment rules, since the new taxation approach needs to be consistent with the existing trade/investment rules, with focus on the relationship between taxation and international investment agreements, which is a specific matter to developing countries, to explore the new desirable taxation approach for developing countries.