Contact: Andrew McLindon
Wilson Hartnell Public Relations
+353-1-669 00 30

Contact: Irene O'Gorman
Deloitte
Marketing manager
+353 1 4178566

Digital convergence is creating opportunities and challenges for businesses competing in a global marketplace and tax is an important -- and often neglected -- aspect of the convergence process, according to the Deloitte Touche Tohmatsu (DTT) Technology, Media and Telecommunications (TMT) industry group, made up of DTT member firm TMT industry groups.  How a business tackles tax issues can make the difference between profit and loss in the convergence evolution.  The DTT report, “Tax Issues in Digital Convergence,” asserts that convergence raises a number of critical direct and indirect tax issues, such as which government entity has the right to tax as borders dissolve for business purposes, and how a good or service will be defined for tax purposes as new and different products and ideas enter the marketplace.

“It is vital for the tax department to be involved in decision-making from the beginning of the convergence process,” said Joan O’Connor, Tax Partner, Deloitte. “As digital convergence continues to take hold, there will be new and diverse products and evolving delivery platforms for businesses that will create confusion and uncertainty in the marketplace and also create tax planning opportunities.”

As convergence often involves increased use of the Internet to download products and services, traditional tax residency borders may be broken down, resulting in unintended tax consequences unless there is careful planning in advance.

“Convergence also results in organisational change including mergers, acquisitions, joint ventures or partnerships,” said O’Connor. “Businesses that recognise the significance of convergence and structure their organisation to maximise tax efficiency from a transactional, operational, and exit-route perspective are going to come out ahead.”  

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Read more on tax issues in digital convergence here.