It's a common piece of dinnertime conversation, nowadays, to mention that big tech companies ought to pay their fair share of taxes. Especially given the crisis ten years ago, especially given public controversies from the likes of Google and Amazon, especially given the world's inequalities. Not that anybody ever wanted them not to—but as momentum gathers for a fairer and more transparent system of taxation, bolstered along by work at governmental levels, the vocabulary is in people's mouths, the arguments are in the op-eds, and fervour for tax equality is not a bold thing to express.

As a result, quite rightly, the EU and the OECD have eagerly set sail on these new waters, trying to turn a rising tide into intelligent draft laws—but this is the step of change where it becomes less clear how precisely to proceed. Tech giants must pay their fair share in taxes, but what makes a share fair? Simply upping tax percentages for tech companies would be a bandage solution that fails to address a complex, changing economy. So should these companies pay taxes in new places, i.e. the countries where their customers live (as some have proposed)? Or continue in a system that most respects where the company is headquartered? Or a combination of both? In the grand landscape of tax philosophy, digital companies and the way they operate are new beasts.

If we are to focus on the digital economy, it needs to be mentioned early on that there isn't really any such thing. By that I mean that there are fewer and fewer aspects of the economy that are not digital, at least partly. Facebook or Apple are your clear proponents of a digital economy, but what about physical retailers whose online sales are robust and border-crossing, or consultancies giving advice via digital channels, or traditional companies whose back-end operations use technology extensively? All of these must be considered in the discussion as well.

For example: compare a brick-and-mortar shop to a digital retailer. The former can easily be located but the latter, by the traditional criteria of today's tax thinking, is invisible. Its only visible element, really, is its customers. So the question becomes, where is it? And how should tax be tied to its location—wherever that location is determined to be?

Consider how banks and investment funds (for example) might be implicated by new digital-minded taxes despite simultaneously being seen as part of the "old" economy and its "traditional" tax model. Drawing a line between digital and non-digital companies is going to be rife with difficulty, especially as technology marches onward.

In this way, a simple cry that tech giants ought to be taxed more brings many smaller decisions in tow. And since keeping competition healthy is of course paramount, local governments and the EU Commission must also consider what meddling could do to the functioning of the free market. For example, if one European country unilaterally adds a new tax, it could lead to double taxation and ultimately hinder cross-border investments. Action at the EU level would, without an OECD-level consensus, likely end up penalising EU-based companies, rendering Europe's single market less competitive. This is why discussions on coordinated change need to be happening at an international level, if they aren't already.

In short: there is a will, but the way must still be decided upon.

To unpack the issue a little further, we could consider two possible objectives for tax in a digital economy. First, if the objective is simply to fight tax avoidance in the current system, I would argue that the anti-base-erosion-and-profit-shifting (BEPS) and anti-tax-avoidance (ATAD) measures currently being implemented are probably enough to solve that issue. It would be worth waiting until these acts produce their effects before deciding what else, if anything, must be done.

On another thread of reasoning, if the objective is to shift tech companies' tax bases from one country to another—i.e. from the company's tax residence to its customers' tax residences—then this marks a larger shift in the philosophy of corporate tax, and thus becomes a political debate. Ideally, an OECD-level consensus should be reached to avoid a messy and problematic transition period. When a clear global wind is blowing, then long-term legal solutions can be enacted.

In my view, the issue boils down to this: decide first, then act. We all want action taken and new tax rules written to reflect the changing ways of business—but the marketplace (and by extension everyone) stands to lose if the transition is made in a piecemeal way. The digital economy doesn't exist as a disparate entity; rather, our one global economy is turning digital. Thus, the political decision-makers in the EU and the OECD countries must agree on what it looks like so we can move towards an updated, fairer system together.

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