Chronicle of a foretold prophecy: the Global Tax Agreement and the adaptation of the territoriality principle to the digital era

Abstract

The digital revolution and the development of cyberspace have rendered the traditional concept of territoriality in tax law obsolete. Currently, multinational enterprises can engage in trade and render services on a massive scale across various countries without maintaining a local physical presence, giving rise to taxation gaps in the jurisdictions where consumers are located.

In light of this scenario, this article analyzes how international taxation responds to these challenges through Action 1 of the Organisation for Economic Co-operation and Development BEPS Action Plan and the G20 Global Tax Deal. To this end, it examines the impact of the regulatory proposals of Pillar One and Pillar Two on territoriality, outlining the guidelines to which Peruvian tax legislation must align in order to adapt to digital commerce.