As the digital economy of Europe expands, strategic planning will be essential to maximize profits and promote fair competition and growth. Taking measures to achieve this growth, earlier this month, the European Union proposed a new policy for fair taxation of the digital economy.
Digital Economy Growth
With technological advancements constantly on the rise, Europe is increasingly reliant on the digital economy. In fact, the digital economy is growing at seven times the rate of the rest of the European economy. High-speed internet access has been a key component in this growth. Making sure that consumers have this access and a desire to utilize it is essential to furthering the digital economy.
Various obstacles exist in the functioning of the digital economy. Factors that play a role include low rates of inter-country consumerism, problems with internet access, companies – especially small businesses – not benefitting from digital services as much as they could, and an outdate system of taxation that no longer meets the needs of a growing digital economy.
Digital Single Market
The aim of a Digital Single Market is to consolidate the various online markets into one all-encompassing market for online commerce. According to economic experts, this could increase economy growth by 415 euros per year. The Digital Single Market aims to increase competition among businesses by creating a market that provides equal access to online tools and equal opportunity for success.
An important aspect of the functioning of the Digital Single Market is a system of fair taxation. The European Commission proposed such a system on September 21, 2017. This new policy hopes to repair the outdated taxation system, which was targeted at businesses that were not based online. Fair taxation ensures that businesses are taxed based on profits, allowing for the competitive arena that is the hallmark of the Digital Single Market.
Future of Digital Economy and Society
The new rules regarding fair taxation are set to take effect beginning in spring of 2018. In addition to forming the framework for the EU Digital Single Market, the European Union hopes to contribute to international taxation policies, which will be discussed in the coming years.
The European Union will surely continue to strive toward maximizing profit and growing its Digital Economy, but this recent taxation policy is a step in the right direction.
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