Taxation of Digital Transactions: Challenges, Models, and Global Implications

With the proliferation of digital transactions and the rapid growth of e-commerce, digital platforms, and cryptocurrencies, governments are increasingly challenged to adapt their tax policies to capture value generated by these transactions. This paper explores the taxation of digital transactions, with a particular focus on the key challenges, existing taxation models, and the international efforts aimed at addressing these challenges. By examining models like the Digital Sales Tax (DST) and Value-Added Tax (VAT), the paper offers insights into their effectiveness, limitations, and global implications. The role of international cooperation, particularly through the OECD, in shaping a fair and efficient taxation framework for the digital economy is also discussed.