handbook-tb

Protecting the tax base in the digital economypractical difficulties associated with requiring offshore suppliers toregister, collect and remit VAT. Smaller suppliers may find the cost ofcompliance prohibitive.5. ConclusionsThe digital economy raises the same kind of tax challenges for developingcountries and OECD countries. However, the adverse impact ofthese challenges is likely greater in developing countries as they relymore heavily on CIT and VAT and are net-importing countries. To protectthe tax base, developing countries have options. Some options aremore immediate, such as amending domestic law to require VAT registrationof offshore suppliers of digital goods and services or extendingwithholding tax to technical services. Other options require moremultilateral coordination, such as reforming the test for jurisdictionalnexus or adopting a global profit split method. Ultimately, the tax baseof developing countries is tied to the growing global digital economy.and Hoonsuk Park, “The ‘Amazon Tax’: Empirical Evidence from Amazonand Main Street Retailers,” (2014), Charles A. Dice Center WorkingPaper No. 2014-05; Fisher College of Business, available at http://ssrn.com/abstract=2422403.449