The Rise of the Digital Economy: Rethinking the Taxation of Multinational Enterprises

Journal of International Business Studies, Forthcoming

Posted: 24 Aug 2019

See all articles by Antony Ting

Antony Ting

University of Sydney

Sidney J. Gray

University of Sydney Business School

Date Written: February 25, 2019

Abstract

The international tax regime in relation to multinational enterprises (MNEs) is ineffective and a rethink is required. We illustrate that the tax avoidance motive of MNEs can incentivize managers to locate profits in low-tax jurisdictions without affecting the locations of their real operations. We also argue that proposals to tax shareholders and consumers rather than corporate profits face significant theoretical and practical obstacles. Finally, we extend a recently proposed model to tax MNEs using a sales-based allocation of consolidated worldwide profits. This aims to prevent MNEs shifting profits to low-tax jurisdictions and reduces incentives for tax competition between countries.

Keywords: digital economy, multinational enterprises, taxation, value chain, tax avoidance, tax reform

Suggested Citation

Ting, Antony and Gray, Sidney J., The Rise of the Digital Economy: Rethinking the Taxation of Multinational Enterprises (February 25, 2019). Journal of International Business Studies, Forthcoming , Available at SSRN: https://ssrn.com/abstract=3440967

Antony Ting (Contact Author)

University of Sydney ( email )

Building H69 Codrington Street
Sydney, NSW 2006
Australia

Sidney J. Gray

University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia

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