Abstract

The global media landscape has been completely transformed with the emergence of digital entertainment and media platforms such as Facebook, Netflix, Amazon, and so on. They allow for the consumption of content across borders. Even though these businesses make a lot of money from global markets, selling advertising spaces and the sale of user data, they frequently pay little to no local taxes because of outdated tax laws. As a result, many governments have implemented Digital services taxes also known as DSTs, which are specifically aimed at such big digital firms that profit from high user engagement without paying the required taxes. This paper seeks to explore the increasing use of DSTs as a unilateral fiscal measure, focusing particularly on their need in the global entertainment and media industry. The paper examines how digital platforms find loopholes such as holding IP ownership and royalties in low-tax jurisdictions to minimize their tax liabilities. The European Union and India's Equalization Levy is also dealt with in this regard. The paper also covers the challenges faced by national governments in enforcing tax liability in the digital economy. It also dives into the OECD’s BEPS 2.0 Pillar 1 and Pillar 2 proposals, and examines whether they offer a reasonable solution for taxing the entertainment sector’s income. It further advocates for a uniform global framework to ensure platforms such as Facebook, Netflix, Spotify and so on, contribute proportionally to the economies and nations from which they derive their revenue to ensure fair tax liability.

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