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Should SA Pursue The Two-Pillar Solution In Terms Of Missing Digital Revenues In Lieu Of The Digital Services Tax?
The 1920s compromise to tax source revenues appears obsolete in the 21st century.1 The digitalization of modern economies has resulted in outdated tax laws. Brick-and-mortar type principles are still applied to determine revenue sources, whereas, in the digital age, many businesses have no physical...
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| Format: | Thesis |
| Language: | English |
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Department of Finance and Tax
2024
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| _version_ | 1867613196008816640 |
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| access_status_str | Open Access |
| author | May, Steven |
| author2 | West, Craig |
| author_browse | May, Steven West, Craig |
| author_facet | West, Craig May, Steven |
| author_sort | May, Steven |
| collection | Thesis |
| description | The 1920s compromise to tax source revenues appears obsolete in the 21st century.1 The digitalization of modern economies has resulted in outdated tax laws. Brick-and-mortar type principles are still applied to determine revenue sources, whereas, in the digital age, many businesses have no physical presence that would otherwise allow states to tax profits of large multinational enterprises (MNEs) deemed to operate within their borders. While the world sought a consensus-based approach to deal with the issues, the Organisation for Economic Co-Operation and Development (OECD) introduced an interim solution – a Digital Services Tax (DST). The DST drew criticism from certain countries, as it is believed to target multinational companies unfairly. The OECD finally achieved worldwide consensus with the signing of the Two-Pillar Solution in 2021, which is to become effective in 2023; however, the signatories of the Two-Pillar Solution also committed themselves to abolish DSTs and refrain from developing any similar types of taxes. While most countries have agreed to the Two-Pillar Solution, some countries have not, including African Tax Administration Act (ATAF) member Kenya. Kenya indicated that its DST provides certainty and assures tax revenues whereas the Two-Pillar Solution's outcome remains uncertain, and the tax revenues are unclear. In addition, ATAF raised concern that the 15% global minimum tax rate proposed is too low for developing African countries and suggests such a threshold will continue to allow MNEs to avoid paying tax in African states. This dissertation will evaluate whether or not DST is a better option for SA rather than the Two-Pillar Solution. If not, are there other ways SA could recover missing digital tax revenues? Like Kenya, SA also has to consider the global minimum tax rate. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/39652 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:32:17.361Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2024 |
| publishDateRange | 2024 |
| publishDateSort | 2024 |
| publisher | Department of Finance and Tax |
| publisherStr | Department of Finance and Tax |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/39652 Should SA Pursue The Two-Pillar Solution In Terms Of Missing Digital Revenues In Lieu Of The Digital Services Tax? May, Steven West, Craig Tax The 1920s compromise to tax source revenues appears obsolete in the 21st century.1 The digitalization of modern economies has resulted in outdated tax laws. Brick-and-mortar type principles are still applied to determine revenue sources, whereas, in the digital age, many businesses have no physical presence that would otherwise allow states to tax profits of large multinational enterprises (MNEs) deemed to operate within their borders. While the world sought a consensus-based approach to deal with the issues, the Organisation for Economic Co-Operation and Development (OECD) introduced an interim solution – a Digital Services Tax (DST). The DST drew criticism from certain countries, as it is believed to target multinational companies unfairly. The OECD finally achieved worldwide consensus with the signing of the Two-Pillar Solution in 2021, which is to become effective in 2023; however, the signatories of the Two-Pillar Solution also committed themselves to abolish DSTs and refrain from developing any similar types of taxes. While most countries have agreed to the Two-Pillar Solution, some countries have not, including African Tax Administration Act (ATAF) member Kenya. Kenya indicated that its DST provides certainty and assures tax revenues whereas the Two-Pillar Solution's outcome remains uncertain, and the tax revenues are unclear. In addition, ATAF raised concern that the 15% global minimum tax rate proposed is too low for developing African countries and suggests such a threshold will continue to allow MNEs to avoid paying tax in African states. This dissertation will evaluate whether or not DST is a better option for SA rather than the Two-Pillar Solution. If not, are there other ways SA could recover missing digital tax revenues? Like Kenya, SA also has to consider the global minimum tax rate. 2024-05-20T11:28:30Z 2024-05-20T11:28:30Z 2023 2024-05-20T11:20:31Z Thesis / Dissertation Masters MCom http://hdl.handle.net/11427/39652 eng application/pdf Department of Finance and Tax Faculty of Commerce |
| spellingShingle | Tax May, Steven Should SA Pursue The Two-Pillar Solution In Terms Of Missing Digital Revenues In Lieu Of The Digital Services Tax? |
| thesis_degree_str | Master's |
| title | Should SA Pursue The Two-Pillar Solution In Terms Of Missing Digital Revenues In Lieu Of The Digital Services Tax? |
| title_full | Should SA Pursue The Two-Pillar Solution In Terms Of Missing Digital Revenues In Lieu Of The Digital Services Tax? |
| title_fullStr | Should SA Pursue The Two-Pillar Solution In Terms Of Missing Digital Revenues In Lieu Of The Digital Services Tax? |
| title_full_unstemmed | Should SA Pursue The Two-Pillar Solution In Terms Of Missing Digital Revenues In Lieu Of The Digital Services Tax? |
| title_short | Should SA Pursue The Two-Pillar Solution In Terms Of Missing Digital Revenues In Lieu Of The Digital Services Tax? |
| title_sort | should sa pursue the two pillar solution in terms of missing digital revenues in lieu of the digital services tax |
| topic | Tax |
| url | http://hdl.handle.net/11427/39652 |
| work_keys_str_mv | AT maysteven shouldsapursuethetwopillarsolutionintermsofmissingdigitalrevenuesinlieuofthedigitalservicestax |