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The digital revolution is transforming economies, business models, and the lives of all citizens. It is dramatically impacting every aspect of economies, including the tax base and governments’ ability to raise revenues. And tax policy is at the top of the agenda in many countries. From the UK and India, to France, Germany, Malaysia and the US, you can see these debates front and center in the newspaper, in politicians’ speeches, and on the minds of citizens.

On behalf of the global accountancy profession, we are committed to advancing a global tax system that is trusted, relevant and resilient to the evolving needs of the 21st century.

A sustainable and vibrant global economy is one that will be efficiently, effectively and fairly taxed. But the tax challenges presented by digitalization raise very complex technical questions. How do you identify value creation for a company whose headquarters are in Germany, whose salespeople sit in Singapore, whose users are global, and who earns revenue by selling ads to other multinational enterprises?

Let’s not be naïve – this is a big challenge and the debate is not about specific companies: it will likely prove inadequate to restrict any approach to just “digital” entities. The entire economy is moving to digital platforms.

The OECD has been addressing this issue within its BEPS Framework over the past half-decade. The current Consultation, issued on February 13 with responses due by March 6, represents a critical decision-making point. On behalf of the global accountancy profession, we strongly encourage pursuit of global consensus in development of taxation policy for the digital economy. We know this will be challenging, but unilateral action will only result in increased complexity, uncertainty and double tax, which will impair cross border trade and impede growth.

In fact, we’ve been advocating for globally aligned practices for years. For more than four decades, IFAC has been working with international standard-setters to promote adoption and implementation of global ethics, audit, education and public sector reporting standards.

The global accountancy profession needs to be a part of the solution. According to research from IFAC, ACCA and CA ANZ, which took the pulse of citizens across the G20 on tax systems, professional accountants are the most trusted group by citizens in contributing to fairer and more effective and efficient tax systems.

As a key player in the digital tax debate, we must use this opportunity to set ourselves on the right course for growth and sustainability. And here’s how: by sticking to a rigorous, global policy-setting process.

Imperative #1: Global Collaboration is Essential

It is in the common interest to maintain a single set of relevant and coherent international tax principles to promote economic efficiency and global welfare. Despite efforts to work towards a consensus-driven global solution, some countries have started to take unilateral action.

Going it alone on policy for taxing the digital economy will increase regulatory fragmentation, which is harmful to the health, resiliency and growth of the global economy. Fragmented regulation is not only costly in terms of resources, but also in terms of added risk to the financial system.

Last year, IFAC and Business at OECD (BIAC), through a survey of senior compliance and regulatory leaders, identified the cost of fragmented financial regulation – more than $780 billion USD each year. This is unacceptable and unsustainable.

However, collaboration for collaboration sake is not enough. Creating good, global tax policy is a rigorous and intensive process that requires identifying and pursuing clear objectives and transparent and open consultation.

The particular aspects in the digital economy associated with identifying value creation and developing a coherent tax policy to address them are challenging – but they need to be addressed collaboratively.

Imperative #2: Learning from the Past to Shape the Future

While the largest digital services companies weren’t quite so dominant at the turn of the 21st century, the dot com boom two decades ago can provide us important lessons for navigating taxing the digital economy.

We can draw upon learnings from the Ottawa Taxation Framework, which was developed at the turn of the century, to address the challenges of then-emerging Internet enterprises. The Ottawa framework laid out several important principles to bring tax practices into the digital age.

Arguably the central principle of the Ottawa framework is neutrality. In 2003, the OECD wrote: “Although many small vendors exist, the market is now dominated by a comparatively small number of larger well-recognized companies with established international names and brands that, in the main, existed before the Internet or were built up very rapidly from the early stages of the Internet boom.”

Sound familiar?

As we did then, we must continue working to collaborate on policy that balances accuracy and simplicity. It must be administrable by both developing and developed countries, and have a good dispute resolution mechanism.

In addition to these principles, we also endorse many of the potential design considerations laid out in the OECD Consultation document, particularly those that seek to:

  • Take into consideration different levels of development and tax administration capacity;
  • Ensure a level playing field between small and large jurisdictions;
  • Examine the potential effect of the various options on revenue and taxpayer behaviors;
  • Limit compliance cost and administration;
  • Keep in mind a principles-based approach;
  • Coordinate between global rules and domestic rules; and
  • Consistently apply the rules across tax administrations in multiple participating jurisdictions.

Imperative #3: Developing Tax Policy that Enhances Trust

Taxes are about many things – money, politics, incentives, economic policy, etc. As citizens, we all know how important taxes are on a personal basis.

Strong and equitable tax systems are key to maintaining public trust in government, tax authorities and other institutions throughout the economy. Our research shows that citizens feel strongly about tax minimization, and whether multinational companies are paying enough tax. This is particularly relevant when it comes to the digital economy, where ambiguity and the inability of tax systems to keep pace with evolving business models has shaped public and government opinion over the past decade.

As it is, citizens are concerned about transparency, inequity and complexity in the tax system, and less than half (42%) see the tax process as generally fair.

The good news is that the public appears to be well-aligned with contemporary policy conversations, as collaboration on international tax policy is supported by the majority of citizens across the G20.

Setting tax policy ultimately comes down to trust – between governments, corporations and people. Protecting this trust is, in its own right, essential to resilient economies. The resolution to the debate surrounding how the digital economy is taxed will go a long way to either enhance or decrease trust in the global tax system.


The reality is that national governments will retain sovereignty over tax policy, and that every nation has unique needs and public opinion contexts surrounding taxation. It’s also true that countries will continue to use tax policy as an economic lever to compete for investment. But, digitalization is a trend that’s only set to deepen, and there is a pressing need for consensus.

We must pursue a process that increases trust in the global tax system and that avoids regulatory fragmentation at all costs. Digital revenue streams will only grow over time – we must get this right the first time to avoid setting the global economy on a crash course of competing interests.

Directionally, the OECD proposals go beyond a focus on strictly "digital” companies and focus on all businesses with cross border operations, whether they are digital or not.

As such, this work will likely affect all businesses with cross-border operations – and it is moving very quickly.  As a result, companies may wish to not only follow this work closely, but also to consider providing comments by March 6, 2019 or otherwise engaging in the debate.

We urge you to add your voice to the global conversation. View the OECD Consultation here.

Kevin Dancey

Former Chief Executive Officer, IFAC

Kevin Dancey, CM, FCPA, FCA is IFAC’s former Chief Executive Officer (2019-2023).

Mr. Dancey has a long history of leadership in the accountancy profession as well as in public service. As Canadian Institute of Chartered Accountants President and CEO, Mr. Dancey led the Canadian accountancy profession’s unification, becoming CPA Canada’s first President and CEO after the merger. His experience also includes serving as the Assistant Deputy Minister, Tax Policy, at Finance Canada (1993-1995); on the Canadian Auditor General Panel of Senior Advisors (2006-2015); and as an Auditing and Assurance Standards Oversight Committee member (2017-2018) and CCAF-FCVI Inc. board member (2008-2013).

Mr. Dancey’s international accountancy experience includes the Public Interest Oversight Board (2017-2018), the IFAC board (2006-2012) and the Global Accounting Alliance (2006-2016), where he was also Chair from 2008 to 2012.

Prior to joining the Canadian Institute of Chartered Accountants, Mr. Dancey was PwC’s Canadian Senior Partner and CEO and was a PwC Global Leadership Team member from 2001-2005. He was national tax practice leader for Coopers & Lybrand before the merger with Price Waterhouse.

Mr. Dancey previously chaired Finance Canada’s Departmental Audit Committee (ended on December 31, 2022) and was a member of the Advisory Board of the CPA Canada Martin Family Initiative, which mentors Canadian indigenous youth, having previously served as the National Coordinator for the program. He is also a Senior Fellow at the CD Howe Institute, a Canadian research institute dedicated to raising living standards through economically sound public policies.

Mr. Dancey is a Fellow at CPA Ontario, where he first qualified, and a member of CPA Canada. He holds a Bachelor of Arts (Hon.) in Mathematics & Economics from McMaster University (Canada) and an honorary Doctor of Laws from the University of Waterloo.

Mr. Dancey is a member of the Order of Canada.