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Digital Tax Reforms

In: Business and Management

Submitted By riturhs
Words 1248
Pages 5
The objective of this paper is to argue the need for tax reforms specifically aimed at addressing global issues in an increasingly interconnected world where tax laws are not designed for the digital age. It highlights the issues faced by countries due to ‘Base Erosion Profit Shifting ‘. The emphasis is mainly on two taxes, namely, ‘Diverted Profit Tax’ and ‘Digital Goods and Service Tax’, which are recently mentioned in the Australian Budget 2015. Organisation for Economic Co-operation and Development’s (OECD) involvement to concrete changes to avoid Base Erosion Profit Shifting (BEPS) has been mentioned. UK’s ‘Google tax’ and the ‘Double Irish Dutch sandwich’ tax evading structure is explained in an effort to elucidate the steps taken by Australian Government to encounter issues similar to them. Facts are stated with regard to the current Australian economy meshing these two new taxes into the existing taxation system. A conclusion is drawn concisely assessing the enforcement of ‘Digital GST’ and ‘Diverted Profit’ taxes and their probable effects on the economy. 1. The need for comprehensive tax reform One of the prime ways of generating economic revenue is to improve the tax capabilities. A good tax system promotes sustainable growth, provides key platform for trade and investments and strengthens the accountability of government to their citizens. The growing complexity in business and technological advances has made it difficult for the existing tax system to keep in pace. Taxes were charged on concrete assets usually that were easy to locate but the emerging mobility has increased the usage of intangible assets that are not easy to estimate. This issue is not resolvable by an individual country. Due to globalisation and inter- dependencies, it has become a problem that needs constructive solution. Australian economy is containing to decline its income tax…...

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