Cross-Border Taxation of the Digital Economy
By Anthony Diosdi Introduction and Summary of the Law Governing Digital TransactionsNew technology and new transactions often raise difficult issues of tax policy and administration. The dramatic expansion of electronic commerce facilitated by the use of the Internet and other technology is subjecting existing tax principles to new pressures. One area of concern is the application of source rules to electronic commerce transactions. Suppose, for example, that a corporation delivers electronically software or a digital product to a customer on the Internet. The customer can download the product and use it commercially. Depending upon the nature of the transaction and the property interests involved, the income to the corporation might appropriately be characterized as a royalty for the use of technology, profit from the sale of a product or a…