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Digital Services Taxes: Principle as a Double-Edged Sword

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  • John Vella

Abstract

The United Kingdom (UK) adopted “value creation” as the guiding principle for designing its digital services tax (DST). This article argues that this principle acts as a double-edged sword. On the one hand, it fits the UK’s general view on the allocation of taxing rights and provides some cover against criticism of the DST. On the other hand, this principle, which is questionable on positive and normative grounds, gives rise to a number of difficult design and implementation issues for the DST. The article concludes that the value creation principle leads to a tax that is complex, arbitrary, and hard to comply with and enforce.

Suggested Citation

  • John Vella, 2019. "Digital Services Taxes: Principle as a Double-Edged Sword," National Tax Journal, National Tax Association;National Tax Journal, vol. 72(4), pages 821-838, December.
    • Handle: RePEc:ntj:journl:v:72:y:2019:i:4:p:821-838
    DOI: 10.17310/ntj.2019.4.08
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    Cited by:

    1. Pavel Peterka & Dominik Stroukal, 2024. "Evidence Against the Undertaxation of Digital Companies from the Weighted Effective Tax Rate Method Analysis," International Journal of Economic Sciences, European Research Center, vol. 13(1), pages 58-80, May.
    2. Gianni Bonaiuti, 2019. "Schemi di pagamento e valute virtuali (Payment schemes and virtual currencies)," Moneta e Credito, Economia civile, vol. 72(288), pages 389-415.
    3. Sarah Oberbichler & Emanuela Boroş & Antoine Doucet & Jani Marjanen & Eva Pfanzelter & Juha Rautiainen & Hannu Toivonen & Mikko Tolonen, 2022. "Integrated interdisciplinary workflows for research on historical newspapers: Perspectives from humanities scholars, computer scientists, and librarians," Journal of the Association for Information Science & Technology, Association for Information Science & Technology, vol. 73(2), pages 225-239, February.
    4. Soichiro Takagi, 0. "Literature survey on the economic impact of digital platforms," International Journal of Economic Policy Studies, Springer, vol. 0, pages 1-16.
    5. Casi, Elisa & Lisowsky, Petro & Stage, Barbara M. B. & Todtenhaupt, Maximilian, 2024. "Business model digitalization, competition, and tax savings," Discussion Papers 2024/6, Norwegian School of Economics, Department of Business and Management Science.
    6. Soichiro Takagi, 2020. "Literature survey on the economic impact of digital platforms," International Journal of Economic Policy Studies, Springer, vol. 14(2), pages 449-464, August.

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