Taxation of digital services: theory, international practice and domestic prerequisites

Reforming corporate taxation taking into account customer value creation concept is a necessary stage in the transformation of the Russian tax system. It will help make it just and efficient in the context of the digital economy in which major IT corporations gain super profits from the use of big data and provision of digital services, the cost of which largely depends on the participation of customers. The goals of the present research are as follows: to substantiate theoretical prerequisites for increasing the tax burden on the companies that use big data as a factor of production, to identify trends and patterns in the modern stage of reforming the taxation of revenues resulting from the provision of digital services in foreign countries, and to substantiate the presence of potential for its application in Russia. In the course of our research we identify features of big data as a factor of production; they demonstrate the need for a special approach to the taxation of income from its use and are important for the identification of the object of taxation. In the light of the European tax reform aimed to create a fair and effective tax system in the digital economy we make an overview of the current practice of introducing digital services tax in the EU member states; we also consider some polemical provisions that require further research. Having analyzed the financial performance and tax burden of the largest IT companies Yandex N.V. and Mail.Ru Group for 2013-2018, we reveal the trend of outstripping growth of gross income and profit in comparison with the amount of tax paid. We also find out that the structure of income is dominated by the items falling under digital services taxation, as well as factors contributing to the reduction of the tax burden. We conclude that Russia has the potential to introduce digital services tax in the medium term.