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Although, there are various short-term measures within digital economic tax systems—such as India's equalization levy, the EU's digital tax, virtual permanent establishments, and the expansion of the withholding system—they currently lead to inconsistent tax practices at an international level. Therefore, the latest conceptual framework in OECD's base erosion and profit sharing (BEPS) action plan proposes a two-pillar approach: 1) to establish a three-tier profit distribution mechanism and reasonably allocate the tax base to the source of income through a new nexus, and 2) to impose a tax on global intangible low-taxed income, expanding the tax system for controlled foreign corporations that were established in the past, and requiring them to pay at least the minimum amount of tax.
This article provides an overview of the development process of international taxation and reflects changes in international economic and political conditions. Taiwan is a small island state that cannot direct the course of discussions between the US, China, Europe, Japan, and other major countries regarding the digital economy; however, if it proactively amends its domestic tax laws to integrate with international tax trend, it may maintain its position against any challenge.
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