China Tax/Business News Flash

Jan 2015, Issue 2

International tax reform may bring higher tax and compliance burden for digital business

The Organisation for Economic Co-operation and Development (OECD) released its recommendations regarding Base Erosion and Profit Shifting (BEPS) Action Plan for addressing the tax challenges of the digital economy (the Report) on 16 September 2014. The 202-page Report does not come to a final conclusion on how states should resolve the issues, but it identifies the broader tax challenges raised by the digital economy and comes up with a number of potential options to address them.

Although there are uncertainties on how the policy is going to change, all taxpayers (whether they have a traditional business model, a digital business model or a combination of both) should pay close attention to the development and realise the potential impact to their business models.

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