Written by Mar Negreiro,
© 3DDock / Shutterstock.com
Sales in the EU still predominantly take place offline – in bricks and mortar shops – and purchases are still predominantly made with cash. However, thanks to the level of convenience they offer, both online shopping and cashless electronic payments are booming and are among the key drivers of the digital transformation taking place in our economy and society. The real-time accessibility of e commerce products and their availability 24 hours a day, together with the ease of making electronic payments, are disrupting many aspects of traditional consumer shopping behaviour, which is also increasingly driven by widespread use of mobile devices and apps.
Online sales hit a record high in 2019. At the international level, China is leading in both e-commerce transactions and mobile cashless payments. However, the coronavirus (COVID-19) crisis has put countries across the world, starting with China, into extraordinary conditions, with citizens staying at home; and some sellers trying to extract the highest profit possible from the situation.
In the EU, a large majority of internet users, particularly those under the age of 45, shop online. Clothes, sports goods, travel and online content such as games, videos and music are among the most popular items.
This trend is also driven by the increase in cashless payments, which have become very popular in some countries. The numerous different cashless payment methods in existence are often highly localised. One such example, the e-wallet, is gaining particular importance, driven by the over 2 billion users it enjoyed in 2019.
On the other hand, e-commerce and the cashless society are facing a host of challenges related to cybercrime, fraud, privacy, the digital divide and pollution, among others. The coronavirus outbreak is also posing various challenges to e-commerce supply chains, many of which are based in the hardest-hit countries. However, the opportunities that e-commerce and cashless transactions afford in terms of convenience, efficiency and affordability will help them gain further ground in the years to come; their popularity among younger generations and strong EU-level policy support for digital transformation are also helping boost their prospects.
Read the complete briefing on ‘The rise of e-commerce and the cashless society‘ in the Think Tank pages of the European Parliament.
Written by Marcin Szczepański,
© Alfa Photo / Shutterstock.com
The digitalisation of the economy and society poses new tax policy challenges. One of the main questions is how to correctly capture value and tax businesses characterised by a reliance on intangible assets, no or insignificant physical presence in the tax jurisdictions where commercial activities are carried out (scale without mass), and a considerable user role in value creation. Current tax rules are struggling to cope with the emerging realities of these new economic models.
The European Union (EU) and other international bodies have been discussing these issues for some time. In March 2018, the EU introduced a ‘fair taxation of the digital economy’ package. It contained proposals for an interim and long-term digital tax. The European Parliament supported both proposals, widening their scope and coverage and backing integration of digital tax into the proposed Council framework on corporate taxation. However, there was no immediate political agreement in the Council. As finding a global solution at Organisation for Economic Co-operation and Development (OECD) level or a coordinated EU approach was not yet feasible, some Member States started implementing or designing national digital taxes. As an indication of difficulties around this issue, the introduction of these taxes in France heightened trade tensions between the EU and the United States of America, with the latter favouring a ‘voluntary’ tax system – a position which may prevent a global agreement.
Over the last few years, the OECD has nevertheless made progress on developing a global solution and proposed a two-pillar system: while the first pillar (unified approach) would grant new taxation rights and review the current profit allocation and business location-taxation rules, the second (GloBE) aims to mitigate risks stemming from the practices of profit-shifting to jurisdictions where they can be subjected to no, or very low, taxation. The EU is committed to supporting the OECD’s work, but if no solution is found by the end of 2020, it will again make a proposal for its own digital tax.
Read the complete briefing on ‘Digital taxation: State of play and way forward‘ in the Think Tank pages of the European Parliament.