Cross-Border Taxation of Digital Goods and Services

With the increasing digitization of the global economy, traditional tax frameworks have struggled to keep up with the pace and nature of technological innovation. The shift from tangible goods to intangible, cloud-based services—such as video streaming, digital advertising, cloud computing, and online marketplaces—has significantly blurred the lines of jurisdiction and revenue allocation. As digital goods and services traverse national borders effortlessly and without the need for physical infrastructure, established taxation principles based on physical presence or "permanent establishment" are increasingly rendered obsolete.Tax authorities around the world are thus faced with the urgent and complex task of redefining the boundaries of fiscal sovereignty in an interconnected, data-driven global marketplace. The inherent mobility of digital businesses allows them to operate in high-revenue markets while booking profits in low-tax jurisdictions, often through aggressive tax planning or base erosion techniques. In this context, ensuring fair, consistent, and administratively feasible taxation of cross-border digital transactions has become one of the foremost challenges in international tax policy. This paper seeks to unpack the evolving landscape of cross-border taxation by critically examining the structural and legal challenges posed by the digital economy. It evaluates the emerging responses by global governance bodies such as the Organisation for Economic Co-operation and Development (OECD), as well as individual country-level initiatives like the Digital Services Tax (DST) and Equalisation Levies.