17 January 2024

The rise of digital business models prompts the adoption of web taxes, aiming to tax gross revenues as a proxy for profit. However, Alessia Sbroiavacca, Fellow at our Italian member think tank, Istituto Bruno Leoni, argues that this approach raises critical concerns.

Taxing gross revenues may overlook actual profitability, burden loss-making firms, and spark tax shifting to consumers. Identification criteria and profit localisation based on user presence face accuracy and fairness challenges, questioning their reliability.

Instead, harmonising a multilateral approach becomes crucial to address these complexities and ensure fairness and consistency in international tax frameworks.