Global Taxation of Digital Transactions: Considerations for Private Equity

Private equity firms contemplating investing in or divesting themselves of digital businesses should be considering the potential impact of a global digital tax. As the Organization for Economic Co-operation and Development (OECD) works toward its goal of creating consistency around how digital products and services are taxed, the prospect of new tax exposures for technology companies inches out of the realm of theory and into the realm of reality. Private equity firms should be taking steps to assess the extent to which a digital tax could lower EBITDA and, thus, valuations.