The rise of Big Data has ushered in a new era where data is seen as the new corporate currency. With an average company managing 162.9 terabytes of data in 2016 and over 2.5 quintillion bytes generated daily in 2024, the value of data has only increased. The mainstream adoption of generative AI (GenAI) is expected to further fuel the growth of data. Businesses’ ability to effectively manage and manipulate this data will be crucial for their success in the marketplace.
As jurisdictions worldwide discuss changes to corporate taxation, the idea of taxing corporations on their data assets has come to the forefront. With various tax regimes in place, some argue that shifting the tax burden to data, one of the most valuable corporate resources, could be a solution. The feasibility and effectiveness of such a tax are still debated, leaving many to wonder what a tax on data would look like and how it could work.
Determining the value of data is a complex issue, as not all bytes hold the same value. While customer data can provide valuable insights, determining what data is truly insightful is subjective. Legislators have attempted to assign value to data through tiered taxes based on the number of consumers or revenue generated. However, the nuances and complexities of data make it challenging to develop a fair and effective tax system.
The international aspect of data taxation adds another layer of complexity, as tax laws vary significantly from state to state and country to country. Harmonizing these laws on a global scale would be challenging, as seen in the struggles of the OECD to consolidate tax rules related to base erosion, profit shifting, and digital taxation over the past decade. Aligning all jurisdictions would likely be necessary for a broad data tax to be successful.
As this issue continues to evolve, corporations must stay vigilant and prepared for potential data tax implementations. Understanding the data they possess, its value, and the potential implications of a data tax will be critical for businesses moving forward. While the future of data taxation is uncertain, it is clear that data will continue to be a valuable asset for companies in the digital age.
