Indirect Taxes in the Asia-Pacific Digital Economy: Developments, Challenges and Potential

This article examines the ways in which the full potential of indirect taxes in the Asia-Pacific (APAC) digital economy can be unlocked, with reference to Singapore, Australia and Malaysia. While prior debates on taxing the digital economy have focused largely on digital services taxes, this article opines that indirect tax is a neutral and efficient instrument for taxing the APAC digital economy. Drawing on the OECD’s destination principle and indirect tax neutrality, the article demonstrates that indirect tax can support stable revenue collection while minimizing distortions to business decision-making. While there are key challenges in tackling the fragmented indirect tax landscape in APAC and managing indirect tax compliance burdens, the full potential of indirect taxation in APAC can be realized by addressing these challenges contextually with better regional coordination, consistent policy design, simplified compliance frameworks and modernized tax administration systems responsive to the evolving digital economy.