Digital taxation reallocates multinational taxing rights to market jurisdictions and establishes a global minimum tax to curb base erosion. Taxing the digital economy raises nexus, data and characterisation issues that challenge traditional profit allocation; OECD proposals include virtual permanent establishment concepts and withholding or levy mechanisms to allocate taxing rights to market jurisdictions. The Two Pillar framework comprises Pillar One, reallocating some taxing rights to market jurisdictions by revising profit allocation and nexus rules, and Pillar Two, a global anti base erosion mechanism imposing a minimum effective tax. India has implemented an Equalisation Levy for specified digital services and introduced Significant Economic Presence to capture source taxation of digital activities.
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Digital taxation reallocates multinational taxing rights to market jurisdictions and establishes a global minimum tax to curb base erosion.
Taxing the digital economy raises nexus, data and characterisation issues that challenge traditional profit allocation; OECD proposals include virtual permanent establishment concepts and withholding or levy mechanisms to allocate taxing rights to market jurisdictions. The Two Pillar framework comprises Pillar One, reallocating some taxing rights to market jurisdictions by revising profit allocation and nexus rules, and Pillar Two, a global anti base erosion mechanism imposing a minimum effective tax. India has implemented an Equalisation Levy for specified digital services and introduced Significant Economic Presence to capture source taxation of digital activities.
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