Skip to content Skip to footer

Loading Results

Economic and Policy Aspects of Digital Services Turnover Taxes: A Literature Review

Start adding items to your reading lists:
Save this item to:
This item has been saved to your reading list.


The rise of the digital economy has forced policymakers to grapple with the fundamental issues of taxation—how best to raise revenue to fund government expenditure—in a more challenging context. To evaluate taxes in the digital economy, twenty years ago countries agreed to use the principles of the Ottawa Taxation Framework Conditions, which include neutrality, efficiency, certainty and simplicity, effectiveness and fairness, flexibility, and equity.

This paper describes various existing and proposed turnover taxes on digital services, and reviews the economic literature related to turnover taxes in general and to digital services turnover taxes, in particular, to assess the extent to which these policies are consistent with the Ottawa Taxation Framework principles.

The takeaway

In reporting on relevant tax policy developments related to digitalization, the OECD finds that the initiatives with respect to turnover taxes are “likely to generate some economic distortions, double taxation, increased uncertainty and complexity, and associated compliance costs for businesses operating cross-border and, in some cases, may potentially conflict with some existing bilateral tax treaties.”

The review of the literature on the subject of turnover taxes, both in general and those applicable to digital services in particular, suggests that without further discussion and consensus among policymakers, the proposals for digital services taxes are likely to confirm the OECD’s findings. Policy makers should carefully consider whether the benefits outweigh the costs of implementing interim taxes on digital services as opposed to waiting for consensus to be reached on a multilateral framework for taxing the digitalizing economy.

Contact us

William Morris

Deputy Global Tax Policy Leader, PwC US

Karl Russo

Director, National Economics and Statistics, PwC US

Follow us