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| Challenges of taxing digital platforms |
| Bratislava, 29.06.2018 |
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| The European Union is working on new legislation addressing taxation in a sharing economy.
Digital platforms like Uber, Airbnb and booking.com have resulted in new challenges in taxation. This is because the so-far tax approach was based on physical presence, i.e. the business entity was physically present in the country where it did its business and it was subsequently taxed. This is not true anymore. As a consequence, digital platforms do not pay taxes in the countries in which they do business but shift their profits to lower-tax locations. So new models on how to tax these companies are being sought. While Slovakia has come up with its own solution, the European Commission has been already working on new legislation addressing taxation in a sharing economy.
“It is like having road traffic rules for bicycles while we already have flying cars in the streets,” said Ľubica Dumitrescu, tax expert at Deloitte in Slovakia, when describing the existing taxation scheme.
Rules for international taxation are obsolete and lead to base erosion and profit shifting (BEPS). This refers to corporate tax planning strategies artificially shifting profits from higher-tax locations to lower-tax locations and thus eroding the tax-base of the higher-tax locations.
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Address : Euro-Brew Ltd., Hlboká 22, 917 01 Trnava, Slovakia
Tel. : +421 33 53 418 53, Fax : +421 33 53 418 52, E-mail : info@eurobrew.sk |
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