Malta Institute of Taxation’s Masterclass: Digitalisation: Will it be a Catalyst for Fundamental International Tax Reform?

The Malta Institute of Taxation recently launched its Masterclass Series, with the first Masterclass entitled “Digitalisation: Will it be a Catalyst for Fundamental International Tax Reform?” which was held on 25 July.

Dr Conrad Cassar Torregiani, MIT president, welcomed the delegates to the first of the Master Class series, an interactive discussion forum on select tax topics, which will be a bi-annual fixture in the calendar of events organised by the Institute. Each Masterclass will take the format of a round-table discussion for a small group of specialist tax professionals, from both the public and private sphere, led by a local or international expert. The series, which is intended to provide a forum for advanced education and the exchange of views on topical tax issues, complements the Institute’s commitment to the development and promotion of tax education in Malta.

The first Master Class session was led by Dr John Vella, Associate Professor of Taxation in the Faculty of Law at the University of Oxford, a Fellow of Harris Manchester College and a Programme Director at the Oxford University Centre for Business Taxation.

The subject matter of the Master Class was the taxation of the digital economy. The focus of the international tax community is now firmly on the digitalised economy – this is evidently at the top of the tax policy and general political agenda. Digitalisation has brought international corporate tax to a turning point. The immediate political concerns are two-fold: profit shifting by highly digitalised companies, and the inability of existing rules to deal with the perceived value of data, users and consumers in a market country without physical presence in that market country. However, as Dr Vella explained, there are two larger issues at stake here: The first is how to allocate taxing rights among countries; the second concerns the type of reform required. It has become clear that the current debate goes beyond how to tax highlydigitalised companies and could lead to a more fundamental change.

The session commenced with a presentation on the Digital Busi- ness Models by Marc von Brockdorff, co-founder and director of Engineering at Hotjar, providing a context to the main theme. Dr Vella then proceeded to share his thoughts, and led an interactive discussion, on the impact of digitalisation on the international corporate tax system, the attempt to ring-fence the digital economy and the likelihood of a more fundamental reform which would alter the very foundation of the current international corporate tax system.