International law framework for the taxation of cross-border transactions in cloud computing services

Abstract

Cross-border cloud services are transforming our lifestyles and accelerating the computerization of everyday life. Every day, cross-border cloud services are having an increasing impact on income tax jurisdiction due to their rapid development. The concept of cross-border cloud services is introduced in this paper, and the impact of cloud computing on tax jurisdiction is discussed. In order to measure the scale of corporate income tax loss during cross-border cloud service transactions, this paper constructs a tax revenue capacity measurement integral model and designs a measurement process based on Bayes’ theorem for the measurement of tax loss across time. Finally, combined with the tax revenue capacity measurement integral model, it empirically demonstrates the scale of corporate income tax loss in cross-border cloud service transactions in 20 provinces and municipalities in China from 2021 to 2023. The regions with more tax loss are Beijing (18.74), Guangdong (4.79), Zhejiang (0.82), and Shanghai (0.73), with a total loss of 597 million yuan, 831 million yuan, and 1.061 billion yuan of cross-border cloud service transaction enterprise income tax in the past three years. Based on the statistics on Amazon’s payment of income tax on cross-border cloud service transactions in 2021-2023, it appears that Amazon’s actual tax payment does not correspond with the income tax payable. It shows that the legal lack of income tax jurisdiction during cross-border cloud service transactions exacerbates the amount of tax losses in China. For this reason, this paper constructs an international law framework from two aspects: the type of income from cross-border cloud services and the determination of permanent establishment.

Keywords

• integral model
• bayes’ theorem
• cross-border cloud services
• international law framework
• 91g50