Tax Implications of Business Digitalization in Multinational Enterprises: A Comparative Study of OECD and EU Countries

The aim of this paper is to investigate the disparities in corporate profit taxation systems on a global level and within the European Union, with a focus on analyzing the proposals of the Organization for Economic Co-operation and Development (OECD) and EU countries for implementing efficient taxation of multinational enterprises. The development of modern business practices, globalization, and digitalization have prompted OECD member states and EU countries to advocate for a fair and effective tax system suitable for the digital age. Many multinational enterprises, through the digitalization of their operations, generate economic value and serve clients in countries where they have no physical presence. This misalignment, coupled with the fact that digital businesses primarily derive income from intangible assets, results in the non-taxation of profits from such activities. This paper explores the challenges posed by these discrepancies, examines the potential solutions proposed by the OECD and EU, and evaluates their impact on ensuring a fair and harmonized taxation system in the context of the global digital economy. By addressing these issues, the study aims to contribute to ongoing discussions about reforming international tax systems to meet the demands of the digital age, while promoting economic justice and preventing profit shifting and tax base erosion. This paper provides a summary of global and EU disparities in corporate profit taxation in the context of the digital economy. It examines how multinational enterprises, through digital operations and intangible assets, generate profits in jurisdictions where they have no physical presence, leading to tax avoidance and base erosion. The study analyzes OECD and EU proposals aimed at addressing these issues by implementing fairer and more effective tax systems. It evaluates the potential impact of these reforms on promoting tax justice, reducing profit shifting, and achieving greater international tax harmonization in response to evolving global business practices.