The digital economy is the growing world economy, which is growing at a drastic rate. Professor Walter Brenner of the University of St. Gallen in Switzerland states: “The aggressive use of data is transforming business models, facilitating new products and services, creating new processes, generating greater utility, and ushering in a new culture of management.” Tax laws around the world are capable of taxing the brick and mortar model. Unique financial transactions were resulting from the digital world, which escapes from the tax net. Before dwelling into the digital economy BEPS point of view, we need to know the future of the digital world.
Following are the few breakthrough technologies which will change the landscape of the economy:
Internet of Things (IoT)
The definition of the Internet of things has evolved due to the convergence of multiple technologies, real-time analytics, machine learning, commodity sensors, and embedded systems. IoT is applied at consumer applications, medical and healthcare military, and manufacturing too. The data captured by the devices will be used by the business for analyzing and customizing the products for the customers, improvising efficiency, and productivity. Identifying and segregating services and their economic value will be a difficult task.
Robots have the potential of making the industries less labor-intensive and more cost-effective and error-free. Automation will enable businesses for faster production and distribution at the same time.
Virtual currencies are units of exchange that are not backed by any Government but used as a medium of exchange. The growth of virtual currencies has led transactions to escape country’s taxation.
Advances in 3D printing have the potential to enable manufacturing closer to the customer with direct interaction with consumers impacting the design of product features. This would potentially move the manufacturing to the place to customers.
The sharing economy or collaborative consumption is a significant trend with the digital economy. It refers to peer to peer sharing of goods and services. Many websites share the resources for donation or at free of charge for the usage of the masses.
Access to Government data
Governments are making progress at making machine-readable resources, notably data, publicly available in what has been alternatively labeled as open data policy, open government, or government as a platform.