{"id":2625,"date":"2016-06-20T10:49:51","date_gmt":"2016-06-20T08:49:51","guid":{"rendered":"https:\/\/www.act.com.mt\/?p=2625"},"modified":"2020-04-20T10:50:11","modified_gmt":"2020-04-20T08:50:11","slug":"article-27-the-tax-challenges-of-the-digital-economy","status":"publish","type":"post","link":"https:\/\/www.act.com.mt\/articles-publications\/article-27-the-tax-challenges-of-the-digital-economy\/","title":{"rendered":"Article 27 &#8211; The Tax Challenges of the Digital Economy"},"content":{"rendered":"\n<p><strong>Broader direct tax challenges<\/strong><\/p>\n\n\n\n<p><em>In our 27<sup>th<\/sup>&nbsp;article in a series of articles on the tax challenges of the digital economy, we shall be providing you hereunder with a brief overview on how the two factors mentioned in articles 25 and 26, namely digital factors and user-based factors can combine with the revenue factor to evidence a non-resident\u2019s enterprise\u2019s regular and sustained participation in the economic life of a country.<\/em><\/p>\n\n\n\n<p>For the purposes of this potential option, total revenue which is in excess of the revenue threshold would be an indicator of the existence of a significant economic presence.<\/p>\n\n\n\n<p>Total revenue may however not by itself be sufficient evidence of a non-resident enterprise\u2019s regular and sustained participation in the economic life of a country.&nbsp; The revenue factor must be combined with other factors such as the digital factors and the user based factors that indicate a purposeful and sustained interaction with the economy of the country concerned.&nbsp;<\/p>\n\n\n\n<p>In other words, a link would have to be created between the revenue generating activity of the non-resident enterprise and its significant economic presence in a country. The report on Action 1 provides the following example to highlight the importance of the revenue factor being combined with the other two factors, namely the digital factors and the user-based factors to evidence a non-resident\u2019s enterprise\u2019s regular and sustained participation in the economic life of a country.<\/p>\n\n\n\n<p>If a non-resident enterprise generates gross revenues above the threshold from transactions with-in country customers concluded electronically through a localized digital platform where the customer is required to create a personalized account and utilize the local payment options offered on the site to execute the purchase, it could be considered that there is a link between the revenue generated from that country and the digital and \/or user based factors evidencing a significant economic presence in that country.<\/p>\n\n\n\n<p>In contrast, it would be more difficult to find such a link where a non-resident enterprise generates gross revenues above the threshold from transactions with-in country customers through in-person negotiation taking place outside of the market jurisdiction, if the enterprise only maintains a passive website that provides product information with no functionalities permitting transactions or intensive interaction with users.<\/p>\n\n\n\n<p><em>In our next article, we shall be focusing our attention on how to determine the income attributable to the significant economic presence.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Broader direct tax challenges In our 27th&nbsp;article in a series of articles on the tax challenges of the digital economy, we shall be providing you hereunder with a brief overview on how the two factors mentioned in articles 25 and 26, namely digital factors and user-based factors can combine with the revenue factor to evidence [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":"","wds_primary_category":10},"categories":[10],"tags":[],"_links":{"self":[{"href":"https:\/\/www.act.com.mt\/wp-json\/wp\/v2\/posts\/2625"}],"collection":[{"href":"https:\/\/www.act.com.mt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.act.com.mt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.act.com.mt\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.act.com.mt\/wp-json\/wp\/v2\/comments?post=2625"}],"version-history":[{"count":0,"href":"https:\/\/www.act.com.mt\/wp-json\/wp\/v2\/posts\/2625\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.act.com.mt\/wp-json\/wp\/v2\/media?parent=2625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.act.com.mt\/wp-json\/wp\/v2\/categories?post=2625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.act.com.mt\/wp-json\/wp\/v2\/tags?post=2625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}