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ARTICLE · 25 NOVEMBER 2020

Digital Taxation – Novel Considerations In M&A Transactions

Digital taxes have become a subject of significant debate in recent years. Following allegations that tech giants have paid very little tax anywhere in the world...

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Digital taxes have become a subject of significant debate in recent years. Following allegations that tech giants have paid very little tax anywhere in the world, some countries have moved to impose new taxes on profits derived from digital services provided by multinational enterprises on a jurisdiction-specific basis. For instance,  France recently adopted a digital services tax of 3% per annum applicable to the portion of revenue that digital companies derive in France. Similarly, as of April 1, 2020, the  UK imposed a 2% per annum tax on the revenue of search engines, social media services and online marketplaces that derive value from UK users. Such initiatives attempt to expand tax-collection powers beyond the countries in which digital companies are deemed to be tax residents and into market jurisdictions in which those multinational enterprises have significant consumer-facing activities.

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