Digital taxation is not entirely new to consumer markets companies, but how it potentially may apply to evolving business models within the industry could be. Virtual supply chains, online stores, voluminous amounts of consumer data, and other similar developments are making digital taxation more relevant. These developments are triggering questions about value creation and related profit-making activities, and how they should be viewed for tax purposes. Consumer markets companies should assess the digital taxation issues affecting their businesses, as well as recent unilateral measures requiring timely compliance.
Due to numerous technological developments in recent years, operating models and business processes within the consumer markets industry have changed dramatically, resulting in antiquated approaches to taxation and questions about how best to tax the new digital economy. Furthermore, with no broad consensus about how digital taxation should operate, and governments increasingly concerned about losing tax revenue, many countries have been implementing unilateral measures to get their ‘piece of the pie.’
It is likely that this trend will continue until an acceptable digital taxation standard is formally adopted by the broader group of OECD member countries. Consumer markets companies will need to be diligent in monitoring developments in order to contribute in a meaningful way to the digital taxation policy conversation and comply with relevant reporting requirements.