Taxing the digital economy: Global and national actions

The digital economy, which has been shaped with the gradual increase in the use of the internet throughout the world, involves many advantages and disadvantages as with almost every innovation. Financially, the most important disadvantage of the digital economy consists of taxation problems. The primary factor causing this problem is the fact that physical assets have lost their importance with the digital transformation, and the concept of physical workplace remains incapable of covering the digital economy. Failing to fully resolve this problem opens the door to the problem of the inability to realize base erosion and profit shifting, both nationally and globally. In recent years, taxation of the digital economy is an issue that many countries and international organizations intend to settle. In order to solve taxation problems caused by the digital economy, studies are conducted at both global and national levels. As one of the most important global studies, OECD's BEPS Action Plan aims to prevent the informal economy and extend tax laws to cover the digital world. This study aims to review the studies conducted in harmony with BEPS against the tax problems caused by the digital economy in Turkey and evaluate the national tax practices of international institutions and some selected countries. Methodologically, the study investigated the tax problems arising as a result of digitalization and reviewed some national tax practices as well as the studies conducted to solve these problems at the global level such as the OECD and the EU. As a result of the study, it was determined that the studies conducted by the OECD and the EU remain advisory, and the countries tend towards national solutions due to the base erosion. In this context, it was found that the countries selected in the study used "digital service tax" and "withholding" methods in order to overcome the tax problems in the digital economy. Turkey also made certain tax regulations for taxation of the digital economy. It is seen that the most important regulations introduced for this purpose in Turkey include the application of withholding on internet advertising revenues and the imposition of the "Digital Service Tax", which was started to be applied in many countries recently. Digital service tax, which is considered as one of the most frequently used methods in the taxation of the digital economy in recent years, is one of the measures taken by countries on a national scale. However, in order to ensure effective taxation of the digital economy, it is important to develop a taxation regime to be created by global organizations such as OECD instead of the national solutions of the countries. Therefore, applications need to be addressed within the framework of international cooperation.