Digitalization of the economy has reshaped the dynamics of interactions and trade for both individuals and businesses, offering an unparalleled expansion of global trade, with businesses and consumers having direct access to a wide range of goods and services that were previously out of reach. 

It also offers governments the possibility of increasing their fiscal revenues. However, digital adoption, including in connection with the adaptation of taxation systems, is uneven around the globe with many economies still on the digital sidelines.

This report focuses on the implications for developing countries of indirect taxation of e-commerce and digital trade. 

It provides an overview of the main challenges, implications and recommendations for tax administrations, capitalizing on experiences of policies and actions put in place in several regions and countries and from international and regional organizations.

It introduces recent trends in e-commerce, explores why e-commerce gives rise to unique taxation considerations, and defines various forms of e-commerce and digital trade. 

It contextualizes these issues within the broader landscape of indirect taxation in developing countries, establishing a connection between the indirect taxation challenges faced by developing countries and the requirements of e-commerce.

Finally, it presents an overview of the primary issues and obstacles related to indirect taxation of e-commerce and digital trade, drawing upon insights gained from both developed and developing countries.

In addition, the annex of the report presents a compilation of contributions prepared by governments, international organizations, civil society and private sector stakeholders, shining a light on challenges and solutions to the adaptation of indirect taxation systems to e-commerce and digital trade.

By bringing together recent research and country experiences, the report highlights possible options for developing countries that seek to improve their systems for raising government revenue through indirect taxation. 

It reviews technical challenges to establishing policies and implementation structures. It also outlines approaches to overcome them and increases awareness of the specificities of e-commerce and digital trade indirect taxation.

Report by the United Nations Conference on Trade & Development