Zhaoyi Li

As the digital economy expands, driven by activities like online shopping and advertising, tax jurisdictions face challenges as taxable activities frequently extend beyond national borders. This shift has led to the emergence of the Digital Services Tax (“DST”) in the EU. Two areas, optimal collection methods and the equitable distribution of taxing rights among countries, are at the forefront of the DST discussion. These issues, central to adapting tax systems to a globalized economy, require careful exploration and international cooperation. In recent years, the debate over whether the U.S. governments should tax digital transactions or digital products has intensified. This paper delves into this issue by examining the tax law framework underlying DST and its implications from a data privacy perspective.

This article explores how DST impacts the collection, use, and security of consumer data within the digital economy. By integrating legal analysis with insights from data privacy studies, it aims to illuminate the broader consequences of DST for privacy rights and regulatory compliance. The article suggests that while DST may offer fiscal benefits, it also raises significant privacy concerns that must be addressed to protect consumer interests in an increasingly digital marketplace. This comprehensive analysis emphasizes the urgency of developing a harmonized approach to DST that balances the economic goals of taxation with the protection of individual privacy, ensuring a fair and equitable digital marketplace for all stakeholders.