IEB Report

Tax Systems Analysis

The Impact of Digitalisation on Tax Systems

IEB Report 3/2021: The Impact of Digitalisation on Tax Systems

For nearly a century, international taxation has been based on principles established within the framework of the League of Nations in the 1920s. The existence of sovereign tax systems in an incipient framework of cross-border economic transactions led at that time to the establishment of principles that would guarantee a certain degree of justice in international taxation by preventing both double taxation of the same profits in more than one state and the failure to tax profits in any state. The idea was to establish criteria or connecting factors—residence and territory—on the basis of which it would be decided which country, or countries, had the right to tax profits.