Taxing Digital Platforms

• In Event: Byte Me: Taxing the Digital Frontier

Abstract

In recent years, 18 countries and two states have enacted digital services taxes (DSTs), which are taxes on the gross revenues that large technology companies derive from the local provision of digital services. Despite the growing popularity of DSTs, empirical evidence on their impacts is limited. This paper draws on Orbis accounting statements to estimate the local effect of DSTs in France, the UK, and Italy on the 27 companies thought to be liable for most digital taxes. I find that DSTs have a negative but imprecise impact on local permanent entity earnings. The tax also results in a sharp and significant reduction in local employment. I complement this with an analysis of web browsing data from France and Germany, where I find that the French DST led to lower French traffic to websites owned by the treated companies, as well as websites that incorporate third-party services provided by the treated companies.

Author

• Gerardo Sanz-Maldonado, University of Michigan: Ann Arbor