In September 2015, the Organization for Economic Co-operation and Development (OECD) published the final 15 Action Plans on Base Erosion and Profit Shifting (BEPS). The most noticed BEPS Action Plan is #1: “Addressing the Tax Challenges of the Digital Economy,” which will cause significant impact on the taxation of cross-border trading and investment structures – not only to e-commerce businesses but also to many other industries, e.g. financial, semiconductor, software, retailing, etc.
The digital economy is the result of a transformative process brought about by information and communication technology to improve business processes and bolster innovation across all sectors of the economy. It also creates very complex and non-traditional business models that are challenging tax authorities around the world in carrying out auditing. As a result, the G20 Summit is devoting more resources to developing new taxation platforms related to the digital economy and the executives of MNCs are paying greater attention to BEPS Action Plan #1.