• Service: Tax, Global Indirect Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 3/24/2014

OECD - Discussion draft on digital economy tax challenges (BEPS) 

March 24:  The Organisation for Economic Co-operation and Development (OECD) today released a discussion drafts on Action Item 1 (Tax Challenges Of the Digital Economy) of the BEPS Action Plan.

As explained by today’s OECD release, BEPS Action 1 aims to identify the main difficulties that the digital economy poses for the application of existing international tax rules and develop detailed options to address these difficulties, with “a holistic approach” and considering both direct and indirect taxation.

Issues to be examined under BEPS Action 1 include, but are not limited to:

  • The ability of a company to have a significant digital presence in the economy of another country without being liable to taxation due to the lack of nexus under current international rules
  • The attribution of value created from the generation of marketable location-relevant data through the use of digital products and services
  • The characterisation of income derived from new business models
  • The application of related source rules
  • How to maintain the effective collection of indirect taxes (e.g., VAT and GST) with respect to the cross-border supply of digital goods and services

The discussion draft [PDF 1.4 MB] provides a consultation process and invites interested parties to send comments with respect to the preliminary results of Action 1.

Comments are due by 14 April 2014.

©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.


Share this

Share this


Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)

Already a Subscriber? Login

Not a member? Subscribe now