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October 1, 2019 DOWNLOAD PDF

The Year in Review: An Annual Publication of the ABA/Section of International Law: International Tax

©2019 by the American Bar Association. Reprinted with permission. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

This article provides an overview on how the following jurisdictions - Argentina, Australia, Brazil, Canada, China, the European Union, Italy, Japan and the United States - reacted unilaterally in 2018 to prevent the erosion of their tax base due to the shifting of sales from traditional brick and mortar stores to the internet.

Since this article was published, France has introduced legislation known as GAFA (Google, Apple, Facebook and Amazon) targeting digital firms with revenue of more than $842 million. Large revenue generating digital companies, however, do not translate into profitable companies. Lyft, for example, continues to operate at a loss despite having annual revenue in excess of $3 billion. Unilateral measures such as GAFA and the measures discussed in this article are a cause for concern given that our traditional tax treaties did not foresee a digital world 100 years ago.

While the world awaits the OECD guidelines, the following discussion is relevant to the various jurisdictions grappling with how to ensure that each gets its fair share of tax revenue from online retailers and service providers operating in its jurisdiction. For example, as part of its re-election campaign, the federal Liberal Party of Canada announced on Sunday September 29, 2019 a proposed new tax on tech and internet giants that sell online advertising or profit from Canadians’ data. This tax would be equal to three percent of a companies’ revenue generated from the sales of online advertising or other profits related to Canadian user data.

Sunita Doobay, is the Editor, International Tax, for The Year in Review an Annual Publication of the ABA/Section of International Law. She is also the Co-Chair of the Tax Committee for the ABA section of International Law.

To read the full article, published by the American Bar Association in the 2019 edition of The Year in Review, click 'Download PDF' below.