Discussion Papers 2024

CIRJE-F-1235	"Taxing Cross-Border Online Sales for Pareto Improvement in Tax Revenue"
Author Name	Ogawa, Hikaru and Ryota Tsuchiya
Date	September 2024
Full Paper	PDF file
Remarks

Abstract
This study examines the effect of international taxation rules that allow market countries to tax the sales of a giant digital IT firm based outside the countries. It develops an asymmetric tax competition model where one country hosts an online service supplier selling digital services over the Internet worldwide. The main finding indicates that changes in tax rules improving market countries will not only benefit them but also the country hosting the global supplier whose tax bases would shrink.
Keywords: Tax competition; Multinational online monopoly; Taxation principles; Tax base sharing

Abstract

This study examines the effect of international taxation rules that allow market countries to tax the sales of a giant digital IT firm based outside the countries. It develops an asymmetric tax competition model where one country hosts an online service supplier selling digital services over the Internet worldwide. The main finding indicates that changes in tax rules improving market countries will not only benefit them but also the country hosting the global supplier whose tax bases would shrink.

Keywords: Tax competition; Multinational online monopoly; Taxation principles; Tax base sharing