DefinePK

Abstract

The digital economy is transforming global markets, driving innovation, and reshaping traditional business models. However, it presents significant challenges for existing tax systems, including issues of tax avoidance, evasion, jurisdictional disputes, and the complexities of taxing intangible assets. This paper explores the role of tax policies in addressing these challenges and leveraging opportunities to foster sustainable growth. It examines global trends and policy innovations, including the OECD's two-pillar solution, digital service taxes, and emerging approaches such as destination-based taxation and blockchain integration. The paper underscores the importance of harmonizing tax policies to balance fairness, innovation, and compliance while promoting investment in digital infrastructure and reducing the digital divide. Recommendations for policymakers emphasize the need for international collaboration, modernization of tax frameworks, and targeted incentives to drive digital transformation. By aligning tax policies with the dynamics of the digital economy, governments can create a resilient, equitable, and sustainable foundation for future growth.
Keywords: Digital Economy, Tax Policies, Sustainable Growth, OECD BEPS, Digital Service Taxes, International Cooperation.