'How ‘Digital Trade’ Rules Would Impede Taxation of the Digitalised Economy in the Global South', August 2020

"PART 1. Strengthening the capacity of developing countries to T 1. protect and broaden their their tax base is essential for financing sustainable development and achieving the sustainable development goals (SDGs). Governments need revenue to perform their roles and responsibilities as part of the social contract, which includes ensuring sustainable livelihoods. The creation of regional and national strategies for digit or digital industrialisation that can fuel the development of business, jobs and consumption, and generate revenue in a dynamic process, require support, investment, vision and policy space...

PART 2. New rules are being developed in free trade agreements (FTAs) and w rules proposed in the World Trade Organization (WTO) in the name of 'electronic commerce’ or ‘digital trade’ that will constrain the governance, regulation and taxation of the digitalised economy. Existing rules that restrict the regulation of trade in services, including financial services, as well as agreements on foreign investment and intellectual property rights, pose additional challenges for lawmakers and tax authorities...

PART 3. Developing countries in the WTO and many FTAs are being asked to agree to a permanent moratorium on levying customs duties on electronic transmissions without a fully informed understanding of the possible impact on their public finances and the potential of their domestic enterprise sector to participate in those digital activities. That proposal constitutes the most immediate threat from trade rules to developing-country public finances and to their industrial development. Successive UNCTAD (United Nations Conference on Trade and Development) studies have warned that converting the moratorium into a permanent ban would have serious future economic and development impacts. This report supports that finding, although it projects a slightly lower-level short-term impact. It places greater emphasis than UNCTAD on the potential for the moratorium to diminish the tax policy space policy space of developing countries permanently and to disable tax policy over a wide swathe of internationally traded goods or services..."