As part of the action plan on base erosion and profit shifting (BEPS) the OECD has produced a discussion draft on the tax consequences of the digital economy. The professional body Chartered Accountants Ireland has suggested that the proposed changes in international taxation would benefit large companies that have extensive markets and would not be of benefit to smaller countries such as Ireland. The changes would have the consequence of moving profits away from the places where value is created to the countries where the products are sold. This is of concern to Ireland whose IT and telecoms exports comprise 12.7 percent of the world market.
The OECD has identified the four main tax challenges arising from the digital economy as those around taxpayer location, taxation of data, classification of supplies and collection of VAT.
