Research On Applicable Law In Digital Service Tax

After entering into the 21st Century,the digital economy has taken off with the help of the advantages of the communications revolution.Internet companies have risen rapidly,driven by both the technology and the era,and have been growing using the characteristics of digital economy,including high permeability,virtuality,liquidity and so on,and have obtained the monopolistic position in new business models like social media,online advertisements broadcasting and participating and coordinating platforms,etc.There is no doubt that digital trade has gradually become an indispensable part of international trade,as well as one of the sources of international tax revenue.However,international tax rules based on traditional business models to regulate new business models are not enough.From one side,the digital firms have made a breakthrough in the requirement of FIXITY of the standing bodies’principles and enterprises’operating activities to earn income won’t be influenced by non-fixed sites,This means that the digital enterprise generates revenue in the market country,but there is no way to determine the degree of linkage between the country and revenue under the standing agency principle,and the market country contributes value without getting a proper feedback;On the other hand,many large multinational Internet companies have been aware of the loopholes in the existing tax system since they were set up,booking revenues in low-tax jurisdictions and spreading costs to high-tax ones,using a"sandwich"approach to avoid tax and eroding the global tax base.In this regard,countries are pinning their hopes on the BEPS Action Plan,with the OECD taking the lead in developing a joint plan to meet the challenges.However,this solution concerns the transfer of the national tax jurisdiction and each country won’t compromise and a unified solution is hard to be reached.Some states have been forced by the real tax benefit loss to explore,from the national level and proceeding the OECD,the ways of taxing the large international internet special digital service income.For example,some states collect tax for digital service.But the digital service’s tax collection is not easy.America launched a Section 301 investigation into the digital services tax in France a day before it was introduced,the report questioned the legality of the tax in France.Different countries have different attitudes towards the digital service tax,and the specific rules of the published digital service tax bill are quite different,which is bound to cause obstacles to the application of the digital service tax law,and it is difficult to guarantee the legal effect pursued by the digital service tax.This paper focused on analyzing the legal application problems and the legal conflicts of the digital service tax.Firstly,it made a basic expression of the digital service tax overview and listed the legal application problems;secondly,it analyzed the legal conflicts formed in the application of the digital service tax;thirdly,it stated how to end the awkward condition of the digital service tax as the unilateral duties in the international tax system.The unilateral duties are bond not to get to the root of the matters.So the tax benefit loss against the background of the digital economy should be settled though consultation and returning to the framework of the tax treaties.In the end,it combined the China’s national conditions with the inspirations of the digital service tax and discussed how could China deal with the challenging of the digital economy:making preparations in policies,having a voice without delay and promoting the national digital economic development and the international tax system.According to the study of this paper,the inconsistency of the specific rules of each state’s digital service system,the breakthrough in the traditional tax jurisdiction and the unilateral duties regulating the international digital service are the conflicts in the legal application.The digital service regulation effect is weakened.The complicated international tax relations have become further unstable,and even the fair taxation purpose won’t be realized.Accordingly,it is necessary to reestablish the international tax revenue,which can face the challenges of the digitization of economy,be accepted by more states and satisfy different states’tax benefit requirements.China should focus on improving the present tax regulation system,so the system can conform to the digital economy development;actively push forward reforms of the international tax,engage in proactively the formulation of the international tax regulations and enhance the competitiveness and influence.