Digital Economy and Taxation: International Approaches to Taxing Digital Services and Lessons for Uzbekistan
Keywords:
Digital economy, digital services tax, e-commerce taxation, OECD Pillar One, Pillar Two, VAT on digital services, Uzbekistan, platform economy, cross-border taxation, tax base erosionAbstract
This study examines the principal mechanisms and international best practices for taxing the digital economy, with particular emphasis on the fiscal policy challenges faced by Uzbekistan during 2019–2024. The rapid expansion of digital platforms, e-commerce transactions and cross-border digital services has eroded traditional source-based taxation principles, creating significant revenue gaps across both developed and emerging economies. Employing a comparative policy analysis framework supplemented by quantitative impact estimation, this research evaluates the effectiveness of unilateral Digital Services Taxes (DSTs), OECD/G20 Pillar One and Pillar Two multilateral frameworks, and Value-Added Tax (VAT) registration obligations imposed on non-resident digital service providers. The findings indicate that jurisdictions adopting comprehensive VAT-on-digital-services regimes combined with progressive DST structures have achieved revenue gains averaging 0.31% of GDP, while simultaneously reducing tax-induced competitive distortions between domestic and foreign digital platforms. The paper identifies five core policy instruments applicable to Uzbekistan’s context and estimates a combined fiscal yield potential of approximately 0.45% of GDP from full implementation. Drawing on comparative evidence from the European Union, India, Kenya, and Singapore, the research provides a taxonomy of digital taxation instruments and evaluates their applicability to transition economies with rapidly growing internet penetration.
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