Critically evaluate the effectiveness of implementing digital tax from the perspective of government, business and consumers.

effectiveness of implementing digital tax from the perspective of government

ASB-4442 International Taxation: Policy & Practice 2020/21
Assignment Title
The title to be used when submitting this assignment is: ‘Digital taxation: evaluation and

Administrative Details
An electronic copy must be submitted through the Turnitin software on Blackboard. Click on
the ‘assignments’ link on the module’s Blackboard site and follow the instructions. If you do
not submit an electronic copy of an assignment before the assignment deadline, it will be
deemed to have missed the deadline.

Assignment requirement:
“Amazon to pass on UK digital tax to sellers in fees hike”1
Please read the article published by CityA.M. (copy available in the ‘Assignments’ folder
on Blackboard and by clicking on the URL link at footnote 1 below). Critically evaluate the
effectiveness of implementing digital tax from the perspective of government, business and

You should frame your evaluation by drawing on Adam Smith’s four canons:
(1) equity, (2) convenience, (3) certainty, and (4) efficiency.
You are expected to include a brief description of ‘digital taxation’ and explanation of its
role in today’s economy. You should also include an explanation of how the UK and one
other country plan to implement the taxation of digital services for a particular industry
and/or company to support your work.

Aim and rationale of the assignment
The digital economy is a global and fast-growing phenomenon which offers opportunities for
commerce, but also brings major problems for tax authorities to manage and administer. It is
argued that existing tax legislation and administration is too old to deal with digital business
transactions and needs to move away from traditional bureaucratic practices to meet the new
demands of information technology and communication, and prevent the non-taxation of some
corporate profits.

One main concern refers to cross-country business transactions and the
question of where the tax base (taxable value) is created and should be taxed. Usual practice
dictates that the tax liability is payable in jurisdictions in which value is created. However,
1 This quote is taken from a heading of an article published by CityA.M. on 05.08.2020. Available at: Accessed on 06.08.2020
ASB-4442 International Taxation: Policy & Practice 2020/21
some argue it should be based in the location of the consumer rather than the company’s

This is a major concern for many state governments in today’s global economy, and
it is in this spirit I have intentionally chosen this topic for your assignment. Developing
knowledge in this area will contribute towards developing your understanding of current tax
issues which not only affect firms, the industry and consumers, but also have a knock-on effect
on state tax revenue, resources, and the financing of public services to citizens. This assignment
requires you to describe and explain digital taxation drawing on relevant academic and nonacademic literature. Your work should also include a critical evaluation that is underpinned by
Adam Smith’s four canons. Please see below suggested readings as a starting point, but it is
expected that you also draw on your own review of the literature to support your work.

Assignment Guidance
This is an academic essay. It will require a brief introduction and conclusion, and a clear
coherent argument throughout. You must use appropriate bibliography and reference your
work using the Harvard style. Your bibliography is not included in the word count. If you
exceed the word limit by more than 10%, your mark will be affected, and you may be asked to
re-submit your assignment. Your assignment will be reviewed for plagiarism, and any cases of
such will be reported. Only one submission is permitted.

The word count for this assignment is a maximum of 2,500 words (not including
Further details and guidance about referencing using the Harvard style can be found:
• by following the link below
• attempting the referencing and bibliography example exercise available to you in the
‘Assignment’ folder on Blackboard.

Guide to Sources
Tax system design are discussed in Lectures 1 and 2 and Tutorials 1 and 2 in the main, and
issues surrounding tax jurisdiction are discussed in Lecture 4 and Tutorial 3. In addition to
these materials, Tutorial 4 specifically focuses on the requirements of this assignment and
offers and opportunity for you to ask questions and explore ideas with other students.
ASB-4442 International Taxation: Policy & Practice 2020/21
A good starting point for reading outside the lecture and tutorial material would be the
appropriate section on tax system design in the core text (Lymer & Oats, 2020/21, chapters 1,
2, and 3) and on international tax (ibid. chapter 12). Also, the book, ‘Comparative Taxation:
Why tax systems differ’, (2017) by Evans, Hasseldine, Lymer, Ricketts, and Sandford
(published by Fiscal Publications) may also prove useful.
As you read this material you should start making notes and the process of critical thinking and
analysis through your note-taking. These notes will help develop your assignment.

Although I am primarily interested here in your own critical analysis of the topic area, some
additional research may be useful to support your work. Academic research has been published
in this area, of which I have listed some in the bibliography list below as a starting point for
you. However, it is your own critical analysis and review of the literature in which I am
particularly interested. The bibliography provided below is intentionally brief because it is
expected that you conduct your own literature search.

Bunn, D., 2018. A Summary of Criticisms of the EU Digital Tax. Tax Foundation, (618).
Cockfield, A.J., 2001. Designing tax policy for the digital biosphere: How the internet is
changing tax laws. Conn. L. Rev., 34, p.333.
Klein, D., Ludwig, C. and Spengel, C., 2019. Ring-fencing digital corporations: Investor
reaction to the European Commission’s digital tax proposals. ZEW-Centre for
European Economic Research Discussion Paper, (19-050).
Li, J., 2015. Protecting the Tax Base in a Digital Economy. United Nations Handbook on
Selected Issues in Protecting the Tax Base of Developing Countries.
Lips, W., 2019. The EU Commission’s Digital Tax Proposals and its Cross-platform Impact
in the EU and the OECD. Journal of European Integration, pp.1-16.
Olbert, M. and Spengel, C., 2017. International taxation in the digital economy: challenge
accepted. World tax journal, 9(1), pp.3-46.

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