TAX CHALLENGES IN THE DIGITAL ECONOMY: EU PERSPECTIVE

Introduction: The main feature of modern society today is the digital way of life combined with digitalisation. It affects every aspect of life. Today's main drivers of change are modern electronic communications and high-speed internet connections or services created by digitalisation. Thus, digi-talisation stimulates economic growth by creating new jobs, especially in the information and communication sector, increasing the savings of individuals and public and private companies, increasing productivity and providing new opportunities for personal development and motivation. Therefore, the digital economy poses significant challenges to the EU tax system. The identified tax challenges are nexus, data and characterisation, standard tax avoidance practices and direct and indirect tax risks. To address these challenges, the concept of Tax Administration 3.0 should be implemented. Under this con-cept, digital tools will make tax administration better organised and more efficient, both in combating abuse and improving the quality of tax reporting and compliance. Aim: This study aims to present the digital economy's direct and indirect tax challenges from an EU perspective. In addition, it will also present the current situation of the digital levy proposed by the European Commission and the level of Europe's digital performance among EU member states. Method: Following the Digital Economy and Society Index (DESI) method-ology, Europe's digital performance varied widely among EU member states between 2015 and 2020. Findings: The results show that the digital sector is highly involved in tax plan-ning practices and significantly affects Europe's digital performance. Moreover, there is no consensus on implementing the digital levy in EU member states since only a few of the EU member states have implemented the digital levy. Based on the findings, the author proposes introducing the digital levy in all EU member states to restore and maintain the sustainability of public finance, especially after the crisis COVID-19. © 2022 by Sabina Hodžić.

The Unaccountability of Tax Devolution: A Case Study of Business Rates

This article examines the accountability arguments for business rates devolution and shows them to be weak. They are undermined by the economic incoherence of the tax, the complexity of devolved powers and a lack of transparency around the use of powers. These problems resonate with a widely held belief that business rates ought to be repealed and replaced with a more carefully designed tax, especially in response to the pressures placed on the system by COVID-19. We are not hostile to these ideas but doubt the likelihood of rapid implementation, and therefore focus on the existing system, paying special regard to the COVID reliefs of 2020 and 2021. We suggest incremental improvements that could reinforce the accountability justifications for devolution;these might be useful even in the event that radical reforms are enacted. © 2021 Thomson Reuters and Contributors.