The Impact and Countermeasures of the “Two Pillar” Scheme for Mobile Digital Enterprise Taxation

Abstract

Twenty-First Century, digital economy has been a tremendous development and become the main economic forms of the world. However, mobile digital enterprises mostly provide services through the use of new platform models, advertising models, etc. and rely on the Internet as commercial interaction channel. Their virtuality and liquidity have brought huge challenges to the existing International Taxation System. The international taxation rules based on “taxable entity” as the basis of authority of taxation venue have been divorced from the current era. The international taxation rules based on “taxable entity” as the basis of authority of taxation venue have been divorced from the current era. In October 2021, 136 members States of the OECD inclusive framework issued <Statement on a Two Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy> . The “pillar one” formulates new connectivity recognition rules and double-layer profit distribution mechanism under the digital economy, so as to minimize the complexity of international tax. The “pillar two” aims to solve the problem of profit transfer and tax base erosion of multinational corporations. The innovative content of the “Two Pillar” program has a direct impact on mobile digital companies in terms of profit distribution, corporate income tax collection and the applicability of preferential policies, etc. In this regard, we should improve the information exchange mechanism, expand the data sources of mobile digital enterprises, unblock the channels of information sharing, and strive to establish a modern international tax governance system.