Multinational Tax Base Erosion Problem of the Digital Economy

Recently, Amazon and Google and other large multinational companies are reported that they use changing corporate structure to avoid tax. This behavior caused widespread international concern. Many multinational companies use digital economy transactions, and take advantage of international tax loophole to erode basic tax. This emerging trading pattern is a huge challenge to national tax authorities. Thus, researching the tax mechanism of Transnational Corporations in the digital economy, a better understanding of the behavior of multinational tax avoidance is important to our country. This paper analyses the digital economy trade transaction characteristics, and points out the cause of the tax erosion in the area of digital economy; then combines with characteristics of the tax system China, discusses on measures taken by China to deal with the tax avoidance in the digital economy.