1

85th Year Anatolian Highschool Model United Nations Conference

G20
The group of twenty

Study Guide
Agenda item: How can the impact of different tax systems in global online marketplaces on
small businesses, local economies, and government revenues be addressed, and what
international standards can ensure fair taxation in cross-border and individually operated
digital commerce?

~Table of contents~

I. Letter from the Chairboard..............................3

II. Introduction...............................5
a. Introduction of the Conference
b. Introduction of the Committee
c. Introduction of the agenda item
III. Definition of Key Terms.........................11
IV. The main difficulties created by different tax systems in global
online marketplaces........................................12
V. The different tax systems of different
countries...................................14
VI. Timeline of events and major examples...............................18
VII. Relevant UN actions................................................21
VIII. Possible solutions....................................22
2
IX. Guiding questions......................................24
X. Bibliography...............................................25

I. Letter from the Chairboard

Letter Of Chairs
Distinguished participants of the 10th 85MBM;

I would like to welcome you all! Thank you for choosing to attend G20 committee. My name
is Güneş Yıldırım and i will be one of your president chairs in this two day long conference. I
hope you will have a wonderful experience.

I have been attending MUN conferences for four years and this year i had the honor of
becoming a president chair. I am just as excited as you all are and i am sure we will all have a
great time.

This year, we will examine the growing influence of online businesses and their negative
impact on local and small retail shops. The rapid advancement of technology and the
widespread use of digital platforms have significantly transformed consumer behavior,
leading to a steady increase in online [Link] has created substantial challenges for
small and locally owned businesses. As a result, this issue has become a prominent concern
in recent years.

I would appreciate if you all read this study guide thoroughly and do extra research about our
committee and agenda. Please don’t be scared for the conference day. It is normal to be
nervous but we will make sure you are all comfortable and have tons of fun! However as
much as we want you to have fun, we also hope you take this conference seriously and learn
useful skills like public speaking and general knowledge that you might use in the future.
Thank you again for attending and don’t be nervous to ask any questions!

Best regards <3

Contact info: 0 541 443 2676

yildirimgunes117@[Link]

Esteemed participants of 10th 85MBM;

First of all, welcome to the G20 committee! My name is Ecem Öztecir. I will be one of your
president chairs. It is my pleasure to serve as your chair. Thank you all for believing in
yourselves and choosing to be a part of MUN.

Throughout the conference I can confidently say that MUN conferences like this not only
improve your skills but also your self-esteem and ability to think seriously. Every speech
3
every resolution you draft will make you more confident and help you gain much more
knowledge. I highly advise you to read this guide carefully. Please research about this topic
as well as your country’s stance. The topics you will discuss are crucial for the development
of your country, as well as for global sustainable economic growth. With regards to this topic,
you will need to understand the opportunities and challenges of the economic digital
transition and the collaboration between public and private actors to ensure the transition.
Me, my co-president chair, our deputy chair and reporter are here to help you. Please do not
afraid to ask questions. I hope you have fun!

Good Luck!! :)

Contact: 0 535 204 1047

oztecirecem@[Link]

Letter Of Deputy Chair;

Distinguished participants of the 10th 85MBM;

Hello dear delegates,

My name is Achelıya Değer, and I will be your deputy chair throughout the conference.
Welcome to the G20 committee! Each of you has a special role in this conference. I hope this
experience will help you gain a new perspective on the global problems and challenges that
many individuals face throughout their lives.
From my experience, I can confidently say that this conference will improve your public
speaking skills, help you learn to defend your ideas, and build your confidence.
I especially encourage first-time delegates to read the study guide carefully and research their
countries’ policies. Our main goals in this conference are to address problems thoughtfully
and work towards effective solutions. I want you all to understand the seriousness of both
these issues and the conference itself, but don’t forget to enjoy the process.
I am truly excited about this conference and believe it will be a fun and impactful experience.
I hope we quickly form a strong connection and collaboration.
Best wishes,
Achelıya Değer
If you have any questions:
0532 308 65 43
Love you all!

4
Letter of Rapporteur;
Distinguished participants of 85MBM'25:
Welcome to the G20 committee! My name is İrem Vardar, and I am honored to serve as your
reporter for this conference. Each one of you brings enthusiasm, creativity, and determination
that will make our discussions meaningful over the two days. MUN conferences not only
expand your knowledge but also strengthen your academic, social, and communication skills.
To all first-time delegates, I highly encourage you to read the study guide thoroughly to
prepare for a productive debate.
As delegates of the G20, you have the important task of addressing pressing global issues,
including but not limited to economic development and international trade. These topics are
complex and interconnected, requiring critical thinking, collaboration, and innovative
solutions. Our goal in this committee is to analyze these challenges carefully, consider
multiple perspectives, and work together to propose practical strategies that promote
international cooperation, stability, and sustainable growth.
I encourage each of you to participate actively, ask thoughtful questions, and contribute your
ideas. Respectful debate, open-minded discussion, and collaboration are the foundations of
this committee, and every voice matters.
I am excited to work alongside all of you over the two days, guiding discussions and
supporting your efforts to represent your countries effectively. Let us make this conference a
productive, educational, and inspiring experience for everyone. Feel free to contact me if you
have questions or any confusion. I am available at any times. Don’t hesitate about anything i
believe in all of you!
contact info: +90 534 021 2009

XOXO
Sincerely Irem Vardar

II. Introduction
a) Introduction of the conference
A.1. How to prepare as a delegate
Delegates should look for books and websites that give a general overview of the topic as
well as information on more specific aspects of your topic. It is important to get an idea of
how complex the subject is and how many different aspects of the topic might be discussed
during the conference. When delegates use the Internet for their research they should make

5
sure to carefully select their sources. The amount of materials available is likely to be far
greater than what they can digest in the amount of time they have available to prepare for a
conference.
It is also important for delegates to keep in mind that web resources must be selected
carefully. Not all websites are reliable sources and many of the sources may be biased. If
possible, delegates should try to find independent confirmation of the information they have
obtained from more than one source.
Moreover, when gathering information, it is important to distinguish between opinions and
facts. Facts are used to support opinions. Whenever possible, delegates should use facts to
support their arguments. Sometimes, however, there are instances when facts are not
available. Ultimately, delegates will be presenting an opinion and must defend it against other
opinions. Therefore, it is crucial for them to be familiar with different viewpoints and
opinions on the topics they are assigned. Delegates should study arguments that are different
from the one their assigned country is likely to take on a topic. They need to analyse the facts
that are used to support opposing arguments. Sometimes the same facts can be used to
support two different positions on a topic. Delegates will need to decide which particular
points they want to focus on in their arguments and this decision needs to be guided by their
country’s policies on the topic they are debating!
When searching the Internet for information it is usually a good idea to vary the keywords
used to research an assigned topic. This will sometimes lead you to additional sources of
information that you might not have found if the keyword search is too narrow.

A.2. Rules of Procedure

Model United Nations (MUN), also known as Model UN, is an educational simulation of
the United Nations (UN), where students learn diplomacy, international relations, global
issues, and how the UN is run. During a model UN conference, students simulate the roles of
representatives of countries, organizations, or individuals to collaborate and present global
issues.
MUN students may be involved in research, public speaking, debating, writing, critical
thinking, teamwork, and leadership. While MUN is primarily an extracurricular activity,
some schools integrate it into their curriculum as a class. Its goals include developing
understanding of global issues and encouraging civic engagement.
Student delegates may prepare for conferences by conducting research, drafting position
papers, and formulating policy proposals. These are discussed and amended during sessions,
culminating in drafting and voting on written policies called "resolution papers." Awards are
often presented to recognize exceptional participants or delegations.
MUN is available for students from elementary to university levels, with conferences tailored
to each age group. Students typically attend conferences as part of delegations from their
school or university, though some participate independently.

6
The following rules of procedure apply to general MUNs but may not apply to every MUN:

Points and motions

Points and motions outline how topics are prioritized, the way resolutions are voted on, and
how they facilitate the general flow of debate. Points are used to discuss topics that are
outside of substantive debate. They are more personal and don't require a vote. There are
several types of points, including a point of information (POI), which is asked after a speech,
a point of order, a point of parliamentary inquiry, and a point of personal privilege.
Motions are used to discuss procedural matters, and they help to further the discussion on a
committee topic. A delegate may request the committee as a whole to perform a particular
action, such as moving to voting procedure. If a motion is objected to, it may not be
entertained at the discretion of the chair. Most motions will require a vote in order to pass; the
number of votes required to pass these motions works according to a Quorum – this is the
minimum number of delegates required to make decisions in a committee. The motions used
at any given time in a Model UN committee change, according to where the committee is in
the flow of debate.

Flow of debate

Most MUN committees follow a flow of debate. This starts with a speakers list, followed by
formal/informal debate and then voting procedure. A dais will maintain a list of speakers, and
the delegates follow the order written on the 'speaker list'. Delegates may be added to the
speaker list by raising their placards or sending a note to the chair. During this time, delegates
talk to the entire committee. They make speeches, answer questions, and debate on
resolutions and amendments. If there are no other motions, the committee goes back to the
speaker list by default.
Formal/Informal debate includes both moderated and unmoderated caucuses. Caucus is an
opportunity to discuss policy ideas. A moderated caucus is more formal and is run by the
committee chair; an unmoderated caucus is a time where delegates move around the room
and have a more informal discussion on the topic. In both moderated and unmoderated
caucuses, the committee enters a recess and suspends its formal rules of procedure. During a
moderated caucus, delegates may speak once recognized by the chair, and speeches are
typically limited to a shorter duration. Entering a moderated caucus requires a motion
followed by a vote. In contrast, an unmoderated caucus allows delegates to engage in
informal discussions with other delegates and staff without needing recognition from the
chair.

Resolutions

7
A resolution is a legal document that expresses the general opinion of the committee. Once
passed, it can be seen as a list of actions that one's committee recommends.
Resolutions are the written compilation of the ideas discussed during debate. They are
considered the final results of conversations, writings, and negotiations. Resolutions must go
through a draft, approval by the dais, and consequent debate and modification.
MUN Resolutions are composed of both preambulatory and operative clauses. Preambulatory
clauses help to outline the general problems that a resolution will fix, whereas operative
clauses suggest possible solutions and help to display solutions in an organized and easily
understandable way.

b) Introduction of the Commitee

The G20 (the Group of Twenty) is an intergovernmental forum that brings together 19
sovereign countries which are Argentina, Australia, Brazil, Canada, China, France, Germany,
India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, Russia, Saudi Arabia, South
Africa, Türkiye, the United Kingdom, and the United States of America as well as the
European Union (EU) and the African Union. It addresses major global economic and
political issues such as financial stability, climate change mitigation, and sustainable
development through annual meetings of heads of state and heads of government.
It was created in 1999 after the 1997 Asian financial crisis. Its members account for more
than 80% of the world’s GDP (Gross Domestic Product), 75% of global trade, and 60% of the
planet’s population. The G20 plays an important role in shaping global policy responses to
crises such as the 2008 financial crisis and the COVID-19 pandemic, promoting coordinated
action on some of the world’s most pressing issues.

8
Group photo at the 2024 G20 summit in Rio de Janeiro, Brazil.

c) Introduction of the Agenda Item

Agenda item: How can the impact of different tax systems in global online marketplaces on
small businesses, local economies, and government revenues be addressed, and what
international standards can ensure fair taxation in cross-border and individually operated
digital commerce?

With the rapid growth of global online shopping, platforms like Temu, Etsy, and Shopier
have changed consumer habits. These marketplaces increase product diversity and help small
sellers reach customers worldwide. However, they also create problems for tax collection,
especially for small businesses and local shops.

While local stores pay sales taxes or VAT, many international online sellers are not required
or able to collect them in every country. This creates unfair competition. For example, Civic
Economics reports that every US$10 million in untaxed online sales is linked to the loss of
about 200 local jobs. As digital commerce expands, small shops are disadvantaged, and
governments lose significant tax revenue.

In our modern world, technology has changed almost every part of life — and trade is no
exception. Online marketplaces have become a key part of the global economy, connecting
millions of buyers and sellers across borders. Today, businesses of all sizes can reach
customers worldwide with just a few clicks. This digital transformation has created countless
opportunities for growth, innovation, and international cooperation, especially for small and
medium-sized enterprises that can now enter global markets more easily than ever before.

9
Yet, while digital trade has made commerce faster and more connected, it has also brought
new and complex challenges. One of the most important of these challenges is taxation.
Every country has its own tax system, rules, and collection methods, many of which were
built for traditional physical trade. These systems often fail to meet the needs of a digital
economy that no longer depends on borders or physical presence. As a result, major
differences between national tax laws have created confusion, unfair competition, and serious
financial imbalances in the global market.
For small businesses, these differences can be particularly difficult. Many of them do not
have the resources or knowledge to deal with complicated international tax requirements.
They often face high costs, extra paperwork, and uncertainty when selling across borders. On
the other hand, large multinational corporations have the ability to move profits between
countries or use legal loopholes to pay less tax. This creates an uneven playing field where
small enterprises are at a disadvantage, and innovation is discouraged.

The effects go beyond individual businesses. Local economies also suffer when fair
competition is not protected. Small and medium-sized enterprises are the backbone of most
national economies — they provide jobs, support families, and keep local markets active.
When they struggle, communities lose opportunities, and economic inequality increases.

Governments, too, face major challenges. The inability to effectively tax digital transactions
has resulted in billions of dollars of lost revenue each year. These are funds that could
otherwise support healthcare, education, infrastructure, and social programs. In many
developing countries, the loss of tax income from online trade deepens existing economic
gaps and limits public investment. Without coordinated global action, this imbalance
threatens both economic justice and long-term development.

For these reasons, the issue of digital taxation is becoming one of the most urgent topics in
international economic policy. This agenda aims to examine how different tax systems in
online marketplaces affect small businesses, local economies, and government income. It also
seeks to explore solutions that can make digital taxation fair, transparent, and globally
consistent.

The creation of international tax standards is essential to ensure that all participants in the
global market contribute their fair share. Through cooperation among nations and
organizations such as the OECD (Organization for Economic Cooperation and
Development ) and the United Nations, the international community can work toward
policies that promote fairness, prevent tax evasion, and support sustainable economic growth.
Establishing balanced and transparent taxation systems will not only strengthen public trust
and financial equality but also help build a digital economy that benefits all — not just the
few who can afford to exploit its gaps.

10
 III. Definition of Key Terms

 Digital Taxation

Digital taxation is the taxing of online business and digital activities, such as but not limited
to e-commerce, streaming, and online ads. It ensures that digital businesses contribute fairly
to public finances in the countries where they operate or generate income, even without their
physical presence.

 Cross-Border Trade

Cross-border trade refers to the international exchange of goods and services between buyers
and sellers residing in different nations. It encompasses both export and import activities and
serves as a vital component of global economic integration. It facilitates market expansion,
competitive growth, and cultural exchange among countries.

 OECD/G20 Inclusive Framework

The OECD/G20 Inclusive Framework is a global cooperation initiative created by the

Organisation for Economic Co-operation and Development (OECD) and the G20 countries to
address challenges in international taxation. It brings together over 140 countries to develop
fair and consistent tax rules, especially for digital businesses, ensuring that multinational
companies pay taxes where their economic activities and profits actually occur.

 Base Erosion and Profit Shifting (BEPS)

Base Erosion and Profit Shifting (BEPS) refers to a set of tax planning strategies used by
multinational enterprises to exploit gaps and mismatches in different countries’ tax systems.
These practices allow companies to shift profits from jurisdictions with high tax rates to those
with little or no taxation, thereby significantly reducing their overall tax burden. The BEPS
initiative, launched by the OECD and G20, seeks to combat these practices by developing
international standards and coordinated policies that ensure profits are taxed where the real
economic activities and value creation take place. Its main goal is to promote transparency,
prevent tax avoidance, and create a fairer global tax environment for both governments and
businesses.

 Small and Medium-Sized Enterprises (SMEs)

Small and Medium-Sized Enterprises (SMEs) are businesses characterized by a relatively

small workforce and limited revenue compared to large corporations. They are vital drivers of
economic growth, innovation, and employment. While definitions may vary by country,
small enterprises typically employ fewer than 50 people, and medium enterprises usually
have between 50 and 250 employees. Despite often facing challenges such as restricted
11
access to finance, technology, and international markets, SMEs play a crucial role in
supporting local economies and fostering community development.

 Fair Taxation Principles

Fair taxation principles are guidelines designed to ensure that tax systems are equitable,
transparent, and consistent. They aim to make sure that individuals and businesses contribute
according to their ability to pay, while preventing loopholes that enable tax avoidance. In the
context of global and digital commerce, these principles emphasize that multinational and
online businesses should be taxed where they generate real economic value. By following fair
taxation principles, governments can secure sufficient revenue without placing an undue
burden on specific groups, promoting economic justice and sustainable public finances.

 Tax Harmonization

Tax harmonization is the process of aligning tax policies, rates, and rules across different
countries or regions to reduce disparities and prevent unfair competition. It aims to create a
more consistent and predictable tax environment, especially for cross-border trade and
multinational businesses. By harmonizing taxes, countries can limit tax avoidance, encourage
fair competition, protect local economies, and ensure that businesses contribute appropriately
to government revenues.

IV. The main difficulties created by different tax systems in

global online marketplaces

IV.I. Labour Laws

Labor laws in large capitalist corporations like Temu and Shein regulate how workers are
treated, including wages, working hours, safety, and benefits. However, because these
companies operate globally and often outsource production to countries with lower labor
costs, enforcement can be inconsistent. Workers in supply chains may face long hours, low
pay, and poor conditions. While the companies are legally bound to follow labor laws in the
countries where they operate, gaps in regulation and oversight sometimes allow labor
standards to be compromised. Strengthening enforcement and ensuring supply chain
transparency are critical to protecting workers’ rights in such corporations.

[Link]. Tax Avoidance & Evasion

12
Tax avoidance and evasion are related concepts, but they differ in important ways. Tax
avoidance refers to legally reducing taxes, often by using loopholes in the law, such as
routing profits through countries with lower tax rates. Tax evasion, on the other hand, is
illegal and involves deliberately not paying taxes, for example by hiding income from online
sales or misreporting earnings. In global online marketplaces, large corporations frequently
use strategies to shift profits to low-tax jurisdictions, allowing them to significantly reduce
their tax obligations. Smaller businesses, however, often face challenges in understanding and
complying with complex cross-border tax laws, which can sometimes lead to accidental
violations. This imbalance not only results in substantial revenue losses for governments,
reducing funding available for public services and infrastructure, but also creates an unfair
competitive environment where large companies gain an advantage over smaller ones.
Additionally, the digital and international nature of these marketplaces makes enforcement
particularly difficult, since transactions can easily cross borders and be hard to track,
complicating efforts to ensure that taxation is applied fairly and consistently across all sellers.
Overall, tax avoidance and evasion in digital commerce highlight the need for clearer rules,
better enforcement, and international cooperation to create a fairer system for businesses of
all sizes.

[Link]. Lack of International Standards

The lack of international standards means there is no uniform set of rules for taxing digital
commerce across countries. Each country has its own tax system, rates, and rules, which
makes it difficult for global online marketplaces and individual sellers to comply. Small
businesses are especially affected because they cannot afford complex tax advice and may
accidentally break rules. Governments also lose revenue when cross-border transactions are
taxed inconsistently or not at all. Without international standards, large corporations can
exploit differences between countries to pay less tax, creating unfair competition.
Establishing global rules could help ensure that all digital sellers contribute fairly to local
economies, simplify compliance for small businesses, and stabilize government revenues.

[Link]. Local Economic Impact

Local businesses frequently face substantial disadvantages when international sellers
operating through global digital marketplaces are subject to minimal or preferential taxation
within a country. This disparity enables large multinational platforms to undercut prices,
capture disproportionate market share, and restrict the growth and competitiveness of smaller,
locally-based enterprises. Over time, such dynamics can significantly weaken domestic
economic structures by reducing employment opportunities, constraining the expansion of
homegrown businesses, and diminishing the overall contribution of small and medium-sized
enterprises (SMEs) to the local tax base. The erosion of local market presence not only limits
entrepreneurial development but also reduces the capacity of governments to generate
revenue from domestic commerce, thereby constraining public investment in infrastructure,

13
social services, and other community-supporting initiatives. Furthermore, in the absence of
equitable taxation mechanisms, global marketplaces may channel a larger proportion of
economic benefits and tax revenues to foreign jurisdictions rather than supporting the
domestic economy, ultimately undermining sustainable and inclusive Citizenship-based
taxation is the least popular type of taxation globally, but since it is used by the US, it affects
millions of people worldwide. Additionally, countries with citizenship-based taxation are not
restricted to taxing only citizens, so non-citizens who meet certain requirements can also be
pulled into citizenship-based tax systems.
economic development. The cumulative effect of such practices exacerbates inequalities
between international and local businesses, distorts competition, and poses long-term
challenges to the resilience and stability of national and regional economies.

V. The different tax systems of different countries

Today, countries use four different types of taxation – citizenship-based, residential,

territorial, and zero tax.

Citizenship-Based Taxation
Under citizenship-based taxation, all citizens of a country must pay tax on their global
income by virtue of being a citizen.
This means that as a citizen of a country that uses this system, you will need to pay some kind
of tax every year regardless of how much time you actually spend in the country.

Sometimes, this tax can take the form of a flat tax on worldwide income, but in other cases,
different types of income may be taxed separately, depending on your source of income and
individual circumstances.
However, regardless of your country’s exact laws, citizens of countries that use this type of
tax system will need to file taxes at home each year unless they renounce their citizenship.

Only two countries in the world use citizenship-based taxation – Eritrea and the US. Eritrea is
a small, war-torn African country located near Djibouti and Ethiopia. It continually scores
low marks in the realms of individual liberties, press freedom, and human rights, and many
Eritreans leave the country to avoid indefinite military conscription.

Residential Taxation
Residential taxation is a far more common – and less complex – tax system. At its most
simple, residential taxation means that if you live in a county, you pay tax, and if you do not
live in a country, you don’t.
Countries that employ residential tax systems typically have clear requirements that delineate
whether a person is a tax resident or not. Many countries use a simple standard – whether a
person has lived in the country for more than 180 or so days – as the basis for residential
taxation.
14
However, in today’s era of digital nomads, residency requirements have begun to include
things like having a valid driver’s license, owning a home, or even voting as residency.
. These countries include many Caribbean islands, such as the Bahamas and the Cayman
Islands, as well as a handful of other small countries, such as Brunei and Monaco. Non-
citizens can live within a zero-tax country for as long as their visa will allow and not pay any
tax. Spending time in zero-tax countries can help you avoid triggering residency requirements
in other countries, and you can work there without possibly becoming subject to territorial
taxation.

Although you can no longer simply leave the country in most places to avoid residential
taxation, the standards are generally clear-cut enough to where you can easily cut certain ties
and be deemed a tax non-resident. Of all of the types of taxation, residential systems are
easiest to navigate since they set clear standards for whether a person is or is not a tax
resident.

Residential tax systems are usually easy to navigate and cast a wide net, so it’s no wonder
why the majority of developed countries use this system. Developed countries seem to prefer
this system since it still allows worldwide income to be taxed yet provides an exemption for
citizens who live abroad. Countries that use residential taxation include Japan, Mexico,
Canada, the UK, Australia, New Zealand, and most of the EU, and a handful of other
countries across Africa, Asia, and South America also use similar systems.

Territorial Taxation
Unlike residential tax systems, which tax anyone who is a resident on their worldwide
income, territorial tax systems only tax residents on income earned within the territory of the
country. In Singapore, for example, many residents are wealthy expats with a number of
foreign investments, but because those investments are outside of Singapore, the country does
not levy a tax on those streams of income.
Therefore, if you don’t earn money within the borders of a territorial tax country, you don’t
need to pay any tax on it.
Territorial taxation is one of the more common tax systems, so a good number of countries
use it, including Hong Kong and Malaysia.

Zero Taxation
While it almost seems too good to be true, a handful of countries charge no tax whatsoever.
That’s right – zero. No if’s, and’s, or but’s, and no tax planning needed.
Unlike territorial tax countries, where you can pay zero tax as long as you have absolutely no
locally-sourced income, zero-tax countries do not tax any type of income whatsoever.
A handful of countries do not tax a cent of your income, even as a permanent resident.
----------------------------------------------------------------------------------------------------------------
As the global economy becomes increasingly digital, many countries have introduced new
forms of digital taxation to ensure that multinational technology companies contribute fairly

15
to the societies where they generate income. Traditional tax systems were designed for
physical businesses, but in today’s world, digital giants such as Google, Amazon, Meta
(Facebook), Apple, and Netflix earn huge profits in countries where they have no physical
offices. This imbalance has encouraged many nations to create new tax policies adapted to
the digital era.
From Europe to Asia, Africa, and the Americas, countries are working to adapt their taxation
systems to the realities of the digital economy. While some nations, like France, India, and
Türkiye, have already implemented clear digital service taxes, others prefer to cooperate
within the OECD framework for a global solution.
These efforts show that the world is moving toward a future where digital companies will be
taxed not just where they are headquartered, but where they actually generate value — that is,
where their users live and where their profits come from.

As an example,
The European Union has been a pioneer in the discussion of digital services taxes (DSTs).
Although the EU has not yet implemented a single, unified digital tax, several member states
have already taken individual action.
France introduced a 3% Digital Services Tax in 2019. It applies to large companies with
annual global revenues above €750 million and at least €25 million earned from digital
services in France. The tax targets digital advertising, online platforms, and data sales.
France’s DST was the first in the EU and inspired many others.
Spain implemented its “Google Tax” in 2021, also at 3%, focusing on revenues from online
advertising, digital intermediation, and user data. Spain’s goal is to ensure that tech
companies pay taxes where their users are based.
Italy launched its digital services tax in 2020, taxing revenues from online advertising, digital
marketplaces, and data transmission. It applies to firms exceeding €750 million in global
revenue and €5.5 million in Italian digital revenue.
Austria applies a 5% tax on online advertising revenues from large multinational companies.
This was introduced in 2020 as part of a broader digital tax reform.
Hungary has one of the oldest digital advertising taxes in Europe, introduced in 2014. The
rate is legislated to vary between 7.5% and 9%, depending on the level of revenue, but the
effective rate has been set to 0% since July 2019 as a temporary measure, pending the global
agreement.
United Kingdom (UK), although no longer an EU member, introduced its own Digital
Services Tax in April 2020. The rate is 2% on revenues from social media, search engines,
and online marketplaces that derive value from UK users. This move was designed to address
public concern about global tech giants paying very little tax.

16
The European Commission is currently working on a plan for a common EU digital levy to
avoid fragmentation between member states and ensure consistent rules across the single
market.

As an another example,
Outside Europe, several countries have also adopted or proposed digital taxes to protect their
economies and secure a fair share of tech revenues.
India was among the first countries in the world to introduce a digital tax. In 2016, it
implemented the Equalisation Levy, which initially applied to online advertising. In 2020, it
was expanded to include e-commerce operators, charging a 2% levy on digital sales made by
non-resident companies. India’s model has inspired many developing countries.
Türkiye introduced its Digital Services Tax in 2020 at a 7.5% rate, applying to digital
advertising, content streaming, and online sales platforms. Turkey’s DST applies to all
companies with more than ₺20 million (Turkish lira) in local revenue or €750 million
globally.
Kenya launched a 1.5% digital services tax in 2021 on revenues earned from digital
marketplaces. It was designed to help the country collect revenue from global tech firms
operating online within its borders.
Nigeria followed in 2022 with a 6% digital tax on non-resident companies that provide
online services or sell digital goods to Nigerian customers.
Indonesia also adopted a 10% Value Added Tax (VAT) on digital services in 2020, applying
to streaming platforms like Netflix and Spotify.
Australia has not yet implemented a separate digital services tax, but it requires large
multinational digital companies to pay GST (Goods and Services Tax) on digital products
and services sold to Australian consumers.
Canada announced plans for a 3% Digital Services Tax to come into force. The government
delayed its implementation to align with global agreements under the OECD framework but
has since implemented the tax in 2024 (with retroactive effect to 2022), maintaining that it
will be repealed once the OECD’s Pillar One is fully in place.
Brazil has proposed a digital transaction tax to replace some traditional taxes, but it remains
under political debate.
South Korea and Japan have chosen not to introduce separate DSTs but instead strengthened
existing corporate tax and VAT rules to include digital services provided by foreign
companies.
Furthermore, recognizing that fragmented national digital taxes could lead to trade conflicts,
the Organisation for Economic Co-operation and Development (OECD) launched an
international effort to create a global digital tax framework.
In 2021, over 140 countries agreed on a “Two-Pillar Solution”:

17
* Pillar One reallocates part of multinational companies’ profits to the countries where users
are located, ensuring fair taxation of digital activities. Countries that adopt Pillar One are
required to remove their national DSTs.
* Pillar Two introduces a global minimum corporate tax rate of 15% to prevent large
companies from shifting profits to low-tax jurisdictions. Many jurisdictions, including the
EU, have begun implementing Pillar Two rules starting in 2024.
The OECD agreement has received strong support from the European Union, United States,
and G20 nations, and it represents the first major step toward a fair and modern global tax
system.

VI. Timeline of events and major examples

The Summit of G20 Finance Ministers and Central Bank Governors, who prepare the leaders'
summit and implement their decisions, was created in response to both the 2008 financial
crisis and the recognition that key emerging powers were not adequately included in global

18
economic governance. Additionally, G20 summits of heads of state or government have been
held to address major international economic issues.
After the 2008 debut summit in Washington, DC, G20 leaders met twice a year: in London
and Pittsburgh in 2009, and in Toronto and Seoul in 2010. Since 2011, when France chaired
and hosted the G20, the summits have been held only once a year. The 2016 summit took
place in Hangzhou, China; 2017 in Hamburg, Germany; 2018 in Buenos Aires, Argentina;
2019 in Osaka, Japan; 2020, originally scheduled in Riyadh, Saudi Arabia, was held virtually
due to COVID-19; 2021 in Rome, Italy; 2022 in Bali, Indonesia; 2023 in New Delhi, India;
2024 in Rio de Janeiro, Brazil; and the 2025 summit will be held in Johannesburg, South
Africa.
Several ministerial-level G20 meetings have also been held since 2010. Agriculture ministers
met in 2011 and 2012; foreign ministers in 2012 and 2013; trade ministers in 2012 and 2014;
and employment ministers have met annually since 2010.
In 2012, the G20 Ministers of Tourism and Heads of Delegation, along with representatives
from the World Travel and Tourism Council (WTTC), the World Tourism Organization
(UNWTO), and other organizations in the Travel & Tourism sector, met in Mérida, Mexico,
on May 16. They focused on "Tourism as a Means to Job Creation." Following this, the G20
Leaders’ summit in Los Cabos on June 18–19 recognized the impact of travel and tourism for
the first time. The Leaders Declaration stated: "We recognise the role of travel and tourism as
a vehicle for job creation, economic growth and development, and, while recognizing the
sovereign right of States to control the entry of foreign nationals, we will work towards
developing travel facilitation initiatives in support of job creation, quality work, poverty
reduction and global growth."
In March 2014, former Australian foreign minister Julie Bishop, during Australia’s hosting of
the 2014 G20 summit in Brisbane, proposed banning Russia over its annexation of Crimea.
BRICS foreign ministers reminded her that "the custodianship of the G20 belongs to all
Member States equally and no one Member State can unilaterally determine its nature and
character."
The 2015 G20 Summit in Antalya, Turkey, focused on "Inclusiveness, Investment, and
Implementation," addressing global economic challenges, development, climate change, and
urgent issues such as terrorism and refugees. Key outcomes included the Antalya Action Plan
and commitments to financial stability, tax regulation, and energy policy.
In 2016, the G20 framed its commitment to the 2030 Agenda and Sustainable Development
Goals under three themes: promoting strong, sustainable, and balanced growth; protecting the
planet from degradation; and furthering cooperation with low-income and developing
countries. At the Hangzhou Summit, members agreed on an action plan and issued high-level
principles to guide implementation.
Japan hosted the 2019 summit. The 2020 summit, initially planned for Saudi Arabia, was
held virtually on November 21–22, 2020, due to the COVID-19 pandemic. The 2021 summit
was held in Rome on October 30–31, Italy.

19
Indonesia hosted the 2022 summit, focusing on global COVID-19 recovery. Its three
priorities were global health architecture, digital transformations, and sustainable energy
transitions. During its presidency, Indonesia, in partnership with the Pandemic Fund
secretariat, launched the Pandemic Fund to reduce epidemic and pandemic risks in vulnerable
regions. Indonesia’s presidency also promoted international cooperation, sustainable
development, and Islamic messages of peace, including hosting the R20 forum to foster
interfaith dialogue.

India hosted the 2023 summit in September 2023 under the theme Vasudhaiva Kutumbakam
("One Earth, One Family, One Future"). Prime Minister Narendra Modi emphasized a
human-centric development approach, focusing on Global South concerns, climate change,
debt restructuring through the G20’s Common Framework, and global cryptocurrency
regulation. The African Union was included in the G20 for the first time since 1999.
The Brazilian presidency launched G20 Social, a platform bringing civil society into debates
and policy formulation for the summit, marking the first time the organization formally
included public participation in its discussions.

VII. Relevant UN Actions

20
The United Nations views fair taxation in global online marketplaces and cross-border digital
commerce as a crucial issue for achieving sustainable and inclusive economic growth.
According to the UN, taxation is central to financing the Sustainable Development Goals
(SDGs) because it enables governments to mobilize resources, reduce inequalities, and
strengthen local economies. However, the UN recognizes that globalization and digitalization
have made it easier for companies to shift profits across borders, allowing many digital
businesses to earn significant income in countries where they pay little or no tax. This creates
unfair competition, weakens government revenues, and places small businesses at a
disadvantage. To address these challenges, the UN advocates for stronger and more inclusive
international cooperation on taxation, ensuring that developing countries have an equal voice
in setting global standards. Through its Committee of Experts on International Cooperation in
Tax Matters, the UN has proposed reforms such as updating tax rules for the digital economy
and expanding source-country taxing rights. Moreover, the UN General Assembly has begun
negotiations for a new **Framework Convention on International Tax Cooperation**, aimed
at creating fairer and more transparent systems to govern digital trade and cross-border
commerce. Overall, the UN believes that modernizing tax systems and improving
international collaboration will help protect small businesses, support local economies, and
secure government revenues in an increasingly digital global marketplace.

Date Action Description

22 Dec 2023 Resolution 78/230
UN General Assembly adopted a resolution to establish an open-ended ad-hoc
intergovernmental committee to draft the terms of reference (ToR) for a framework
convention on international tax cooperation.
Aug 2024 Draft Terms of Reference adopted
The ad-hoc Committee finalised the ToR for the proposed convention.
3-6 Feb 2025 Organisational Session of Intergovernmental Negotiating Committee (INC)
The INC (for the proposed UN Framework Convention on International Tax Cooperation)
held its first session.
21 Mar 2025 Special Meeting on International Tax Cooperation
The United Nations Committee of Experts on International Cooperation in Tax Matters held
its 30th session focusing on inclusive tax cooperation, digital economy issues.
30 Jul 2025 New Expert Appointments
The UN Secretary-General appointed 25 experts for the Committee of Experts (2025-2029) to
assist countries with tax policy in digital and globalised contexts.

21
July 2025 “Roadmap for negotiating the protocols” published A report outlining how the
convention’s early protocols (on cross-border services, dispute prevention/resolution) should
be negotiated.

VII. Possible Solutions

VII.I. Simplified Tax Systems for Small Businesses
Simplified tax systems for small businesses are vital to ensure fairness and encourage
participation in the global digital economy. Many small online sellers face significant
challenges when trying to comply with tax rules in multiple countries. These rules can be
complicated, inconsistent, and difficult to understand, creating barriers for small businesses
that do not have large teams or resources to manage complex tax obligations. Therefore,
small sellers may be discouraged from entering international markets or may unknowingly
violate tax laws, while larger multinational companies can navigate the system more easily.
To address these challenges, governments can provide clear and easy-to-follow guidance,
including step-by-step instructions, plain-language explanations of tax responsibilities, and
accessible online tools for submitting required information. Additionally, offering training
programs, support hotlines, and educational resources can help small business owners
understand the tax system, avoid mistakes, and comply efficiently. By making tax systems
simpler and more transparent, governments can reduce administrative burdens, promote
voluntary compliance, and ensure that taxes are collected fairly. Such measures not only
protect small businesses from being disadvantaged in the digital marketplace but also
strengthen local economies, encourage entrepreneurship, and support the sustainable growth
of cross-border trade. Ultimately, a simplified and accessible tax system empowers small
businesses to compete effectively, contributes to fair revenue collection, and ensures that the
benefits of the growing online economy are shared more equally among all participants.

[Link]. Education and Support for Small Businesses

Education and support for small businesses are essential to ensure their fair participation and
success in the global digital economy. Many small online sellers face challenges due to
complex tax systems, cross-border regulations, and unfamiliar administrative requirements,
which can discourage them from entering international markets. To address these barriers,
governments and international organizations should provide comprehensive educational
programs that explain tax obligations, reporting requirements, and legal responsibilities in
22
clear, accessible language. These programs can include workshops, online tutorials, webinars,
and instructional guides, allowing small business owners to understand and comply with rules
effectively. In addition to formal education, support services such as helpdesks, advisory
consultations, mentorship programs, and online Q&A platforms can offer practical guidance
for individual business challenges. Digital tools, including calculators, automated reporting
systems, and mobile applications, can further simplify the management of taxes, sales
records, and compliance tasks, especially for sellers with limited technical expertise.
Education and support should also emphasize the broader benefits of compliance, such as fair
competition, protection of local economies, and contribution to public revenue that sustains
essential services. By empowering small businesses with knowledge and practical resources,
governments ensure that they can compete fairly with larger multinational platforms, expand
into cross-border markets confidently, and maintain ethical and transparent business
practices. Ultimately, investing in education and support strengthens local and national
economies, fosters entrepreneurship, encourages sustainable growth, and helps create a more
inclusive digital marketplace where businesses of all sizes can thrive.

[Link]. Making International Tax Rules Fair

Making international tax rules fair is essential to ensure equity, transparency, and sustainable
growth in the global digital economy. Currently, many multinational online companies are
able to conduct cross-border transactions without fully complying with the tax obligations of
the countries where their customers reside. In contrast, local and small businesses are often
required to adhere strictly to domestic tax regulations. This imbalance creates unfair
competition, disadvantages smaller enterprises, and reduces government revenues that could
otherwise support public services and local development. To address these challenges,
Member States should work together through international organizations such as the United
Nations, the OECD, and the G20 to develop harmonized, transparent, and enforceable tax
standards for cross-border digital commerce. Such standards should ensure that all
businesses, regardless of size or location, contribute appropriately to the countries in which
they generate economic value. Furthermore, fair tax rules should prevent profit shifting and
tax avoidance, provide clear guidance for compliance, and minimize administrative burdens.
By establishing a coordinated and equitable international tax framework, governments can
protect local economies, strengthen global economic cooperation, and promote an inclusive
and sustainable digital marketplace where the benefits of online commerce are shared fairly
among all participants.

[Link]. Support for Developing Countries

Support for developing countries is crucial to ensure that all nations can participate fairly in
the global digital economy and collect taxes effectively. Many developing countries face
significant challenges in enforcing cross-border tax collection due to limited technical
capacity, insufficient digital infrastructure, and a lack of trained personnel. Without proper
support, these countries risk losing substantial revenue from international online sales, which
can undermine local businesses and reduce funds available for public services. To address

23
this, wealthier nations and international organizations should provide technical assistance,
capacity-building programs, and digital tools to strengthen tax administration in developing
countries. This can include training tax officials, offering user-friendly software for
monitoring online transactions, and providing guidance on implementing fair and efficient tax
systems. Additionally, collaboration through multilateral frameworks, such as the OECD/G20
Inclusive Framework on BEPS or UN initiatives, can ensure that developing countries have a
voice in shaping global tax rules and can access the knowledge and resources needed to
comply effectively. By offering education, technical support, and international cooperation,
the global community can help developing nations collect revenue fairly, protect local
businesses, promote economic growth, and ensure that the benefits of the digital economy are
shared equitably across all regions.

VII.V. Public Awareness and Compliance

Raising public awareness is essential to promote fair taxation, compliance, and ethical
practices in the global digital economy. Many consumers and small online sellers are
unaware of their tax obligations or the impact of untaxed sales on local economies. This lack
of awareness can contribute to tax evasion, unfair competition, and revenue loss for
governments, which in turn affects funding for public services and local development. To
address this issue, governments and international organizations should launch public
information campaigns, educational programs, and outreach initiatives to inform both sellers
and buyers about tax responsibilities and the importance of supporting businesses that comply
with regulations. These campaigns can include online tutorials, social media content,
workshops, and informational guides that explain taxes in simple terms and highlight the
benefits of compliance. Encouraging consumers to prioritize purchases from registered sellers
and promoting transparency in online marketplaces can also help create a culture of fairness
and accountability. By increasing public awareness, Member States can strengthen voluntary
compliance, protect local businesses from unfair competition, ensure equitable tax collection,
and foster a responsible and inclusive digital marketplace where all participants understand
their role in supporting sustainable economic growth.

IX. Guiding Questions

1. How do taxation systems differ across countries in regulating digital businesses, and how
do approaches like territorial, residential, citizenship-based, or zero-tax systems affect
governments’ ability to collect revenue from multinational tech companies?

24
2. What challenges do small and medium-sized enterprises face when competing with
international online sellers that face lower or no local taxes, and how does this affect their
growth, customer reach, and pricing?

3. What tax policies or agreements can ensure fair competition between domestic and foreign
e-commerce firms, and how can organizations like the G20 or OECD prevent tax avoidance?

4. What measures can developing countries take to improve digital tax collection and
enforcement, and how can international cooperation and technological support strengthen
these systems and reduce revenue loss?

5. How does the lack of global digital tax laws affect regional economies, government
revenue, and market fairness when multinational corporations earn profits without paying
local taxes?

6. Should educational programs teach taxation and digital economics to increase public
awareness, compliance, and support for fair taxation?

7. How can governments monitor cross-border e-commerce to prevent tax evasion while
balancing data privacy and enforcing reporting obligations?

X. Bibliography

[Link]
asakawa/

[Link]
oecd-and-g20-countries_g1g59f77/[Link]

[Link]
challenges-of-the-digital-economy_g1g46cf1/[Link]

[Link]

[Link]

25
[Link]
consequences-digitalized-economy

[Link]
international-tax-cooperation

[Link]
experts

[Link]
[Link]

[Link]
development

[Link]
session-summary

[Link]

[Link]
sustainable-development

[Link]
terms-of-reference-for-tax-cooperation-framework

[Link]

[Link]
prospects-and-challenges-developing

26