Taxing the Digital Economy through Significant Economic Presence

The main motivation behind this paper is to discourse the current worldwide issues caused due to the digital economy, to examine about the different changes made in the Tax Model Convention by the OECD and to examine and breakdown its various provisos present in its execution. The extent of this paper is to bring an elementary understanding of the notion of Permanent Establishment and Business connections so as to draw the implication of the emergence of Digital taxation in the world and the interference of the concept of significant economic presence in the Indian Taxing regime, suggesting further improvements and effective implementation strategies.

To elucidate in nutshell, the author mainly concentrates on these five subdivisions; Firstly as to What Permanent Establishment is, Secondly, various proposals, approaches & principles of the OECD, Thirdly, the Two Pillar concept, Fourthly BEPS ACTION PLAN 15& 7 that discusses the different complications in taxation due to Digitalization, Fifthly Significant Economic Presence in India, Equalization Levy and the connection between the two.

In conclusion, the authors put forth the impact of bringing in the amendments that fit in the digitalized economy and the hitches in the execution thereby creating attention to make the taxing through SEP in an efficient way.