IMF Conference

Digitalization in Asia is pervasive, unique, and growing. It stands out by its sheer scale, with internet users far exceeding numbers in other regions. Yet, digitalization also raises new tax challenges. Existing income tax systems are widely perceived as unfair as they fail to assign taxing rights to countries where non-resident businesses make e-commerce sales or where online users are located.

Global tax reforms currently under consideration under the OECD-led Inclusive Framework will likely change the geographic distribution of tax revenue paid by multinational enterprises in Asia, creating winners and losers. Unilateral measures, such as digital services taxes, have been introduced by many countries in the region, but create tradeoffs, and potential revenues remain limited. Finally, a key question for indirect taxes is not “what” to tax, but “who” will collect the tax.

Against this backdrop, this high-level virtual seminar will coincide with the launch of an IMF paper that analyzes digital services taxes, evaluates Pillar 1 of OECD’s Inclusive Framework, explores more fundamental reforms for the future, and addresses VAT challenges—all from the perspective of Asian economies. The discussion will focus on the present and future of taxation in an increasingly digitalized world and the global and domestic reforms needed to meet the challenges.