THE TAXATION OF DIGITAL PLATFORMS: an analysis of emerging fiscal challenges and institutional policy responses

In the last decades technologies’ innovations have deeply impacted the way of doing business, creating new structures and business models. Globalization has facilitated the rapid expansion of such new business models, bringing to the fore digital platforms. Such models, comprised in the broader context of the digital economy, have become particularly known for their capacity to avoid taxes. Because of their capacity to avoid taxes, policy makers have started wondering whether current policies are still adequate. Hence, this thesis, by focusing on digital platforms, develops the objective of analysing emerging fiscal challenges and institutional policy responses. In order to achieve this objective in a fruitful and clear manner, four different chapters compose this thesis. Such structure allows to analyse the issue under different perspectives: theoretical, legal and empirical. Chapter one clarifies the theoretical background underlying the concept of digital platforms, recalling from the contribution by Rochet & Tirole, (2006) and Koethenbuerger, (2020). Such background, clarifying the characteristics of digital platforms, allows moving on to discuss current fiscal issues. Chapter two reflects on the possible structure used to describe digital platforms’ taxation dynamic. Through the contribution of recent literature and law, it claims platforms exploit the agency theory in order to gain unfair economic advantages in terms of competition, labour costs and taxes. Such mechanism is recognised as originating the roots of the difficulties in the taxation of digital platforms. Chapter three recognises broader challenges resulting in the actual difficulties in the field of both direct and indirect taxes. Such difficulties, originating from asymmetries between traditional businesses and digital platforms businesses are divided into three different sections: territorial, information and regulatory asymmetry. Lastly, chapter four focuses on analysing measures developed by national and international institutions. The political context influencing their effectiveness is also discussed. Through an empirical case study, the chapter collects data and simulates the introduction of a levy targeting Airbnb’s revenues, discussing insights for policy makers based on results obtained. Through a theoretical, legal and empirical approach, this thesis contributes to foster the debate on fiscal challenges and on how to ensure a fair and efficient taxation in the digital era.