Taxation of the Digital Economy: Policy Challenges and Reform Priorities

Marilyne Sadowsky

Taxation of the Digital Economy: Policy Challenges and Reform Priorities

Author(s)	Marilyne Sadowsky
Country	United States
Abstract	The rapid expansion of the digital economy has transformed global business models, consumer interactions, and international economic activities. Digital platforms, online services, cloud computing, artificial intelligence, and cross-border digital transactions have created new opportunities for economic growth while generating significant challenges for traditional taxation systems. Conventional tax frameworks, which were primarily designed for physical business operations, often struggle to effectively address value creation and revenue generation in digital markets. This study examines the taxation of the digital economy by analysing major policy challenges and reform priorities. The research explores issues including digital business models, cross-border taxation, profit allocation, tax compliance, regulatory coordination, and emerging international tax reforms. A conceptual analytical framework supported by simulated observations is developed to evaluate key factors influencing effective digital taxation policies. The findings indicate that digital taxation requires balanced policy approaches that promote revenue efficiency while maintaining innovation and international economic competitiveness. Global tax coordination, improved digital reporting systems, transparent regulatory frameworks, and adaptive taxation models represent important priorities for addressing digital economy challenges. However, issues such as jurisdictional conflicts, compliance complexity, data-based value creation, and differences in national tax policies continue to influence reform efforts. The study contributes to international taxation and digital economy literature by explaining the relationship between technological transformation and evolving tax governance requirements. The findings provide practical implications for policymakers, tax authorities, multinational enterprises, and international organizations seeking sustainable taxation frameworks for the digital era.
Keywords	Digital Economy, Digital Taxation, International Tax Policy, Tax Reform, Cross-Border Transactions, Digital Platforms, Tax Governance
Field	Engineering
Published In	Volume 3, Issue 1, January-February 2021
Published On	2021-01-17

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Taxation of the Digital Economy: Policy Challenges and Reform Priorities

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