Zhaoyi Li (Albany; Google Scholar), Privacy Paradox in Digital Service Taxation:

As the digital economy expands, driven by activities like online shopping and advertising, tax jurisdictions face challenges as taxable activities frequently extend beyond national borders. This shift has led to the emergence of the Digital Services Tax (“DST”) in the EU. While current discussions focus on the optimal methods and equitable distribution of taxing rights among countries, it overlook issues of user privacy inherent in taxes like DST. In light of the ongoing debate over whether the U.S. should tax digital transactions, this article examines the legal framework of the DST and explores its implications from a data privacy perspective.

By analyzing the impact of digital taxes on the collection, use, and security of consumer data in the digital economy, this paper aims to illustrate the broader effects of digital taxes on privacy rights and compliance. The article suggests that while DST may offer fiscal benefits, it also raises significant privacy concerns that must be addressed to protect consumer interests in an increasingly digital marketplace. This comprehensive analysis emphasizes the urgency of developing a harmonized approach to DST that balances the economic goals of taxation with the protection of individual privacy, ensuring a fair and equitable digital marketplace for all stakeholders.

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