Problems caused by unilateral measures while taxing the digital economy: Does the value creation approach suggested by OECD solve the problem?

Abstract: This thesis examines the challenges arising from unilateral measures taken by both developing and developed countries to protect their taxing rights in the digital economy, leading to issues of double taxation. It focuses on India's equalisation levy and the UK's diverted profits tax (DPT) as examples of unilateral measures. The thesis evaluates whether the value creation approach recommended by the OECD can effectively eliminate juridical double taxation in the digital economy.The thesis also discusses the value creation approach in the context of the BEPS initiative and transfer pricing regulations, emphasizing the importance of functional analysis. The EU Commission's proposal of a "significant digital presence" to establish a taxable nexus is examined as well.While the traditional approach based on physical presence is not suitable for the digital economy, the thesis argues that the value creation approach can ensure fair and sufficient taxing rights for jurisdictions where value is generated.