The Physical, Human Driven Digital Economy: The Overvaluation of Intangibles and its Effects on Tax and Society

The authors in this paper provide a unique perspective to the debate around the digital economy, intangibles and taxation. They argue against the common perception of the digital economy being driven mostly by data, technology, the network effect or broadly speaking – intangibles.

They argue instead that “intangibles”, “technology”, or even “robots” should not simply be regarded as output of a genius or AI from the cloud but as output of labour, data, and resources. They posit that intangibles are overvalued, and auxiliary routine functions are undervalued. The potential reasons for this overvaluation include a lack of digital literacy even under experts, a biased valuation process, and tax evasion.

The authors opine that the potential negative impacts, such as inequalities and a monopoly driven innovation blockade, resulting from a potential overvaluation, emphasizes the need for further research, and submit that when the issues are looked at from their prism, the outcome for the nexus discussions in international tax law will be that even for AI you might need a physical presence in the form of labour, data, and resources.

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