The impact of fiscal rule changes on digital products trade

The impact of fiscal rule changes on digital products trade | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article The impact of fiscal rule changes on digital products trade Viktor Stojkoski, Sonja Mitikj This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9216477/v1 This work is licensed under a CC BY 4.0 License Status: Under Revision Version 1 posted 5 You are reading this latest preprint version Abstract Digital product trade, including digitally delivered goods, productized digital outputs, and platform intermediation fees, has expanded rapidly over the past decade. Fiscal rules, however, have not kept pace: the World Trade Organization (WTO) moratorium constrains customs duties on electronic transmissions, while the rising introduction of heterogeneous digital services tax (DST) regimes by individual governments imply that otherwise similar digital transactions face very different fiscal treatment across destinations. Our findings show that digital product trade is sensitive to fiscal wedges, i.e., the policy “add-on” to a cross-border digital transaction, such as a DST rate or a tariff-equivalent charge. Yet the aggregate trade effects of policy changes within observed statutory ranges are moderate in magnitude. Compared to DST, tariffs reduce global digital trade by a larger margin but also generate higher revenues. Importantly, the two regimes differ in their geographic incidence. Tariffs shift the fiscal burden toward countries hosting digital firm headquarters, whereas DST reallocates it toward countries where digital subsidiaries operate. Overall, the results highlight a trade-off between revenue, trade openness, and the geographic allocation of tax burdens in the digital economy. JEL Classification: F13; F14; H25; H87; L86 Digital products international trade digital services tax WTO moratorium Full Text Cite Share Download PDF Status: Under Revision Version 1 posted Editorial decision: Revisions needed 12 May, 2026 Reviewers agreed at journal 27 Mar, 2026 Reviewers invited by journal 27 Mar, 2026 Editor assigned by journal 25 Mar, 2026 First submitted to journal 24 Mar, 2026 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-9216477","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":613227951,"identity":"42c3d91e-d333-4851-8e67-6986a8ac3aa4","order_by":0,"name":"Viktor Stojkoski","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAzUlEQVRIiWNgGAWjYDACZjYGBsYGBgZ+ECehgAQtEpINIC0GRFkD1WJwAMQhRovBcbbkDz932NQZn1+d+OGBAYM8v9gBAloOsx2T7D2TJmF24+1mCaDDDGfOTsCvRbKZvY2Bt+0wUMvZDSAtCQa3CWtp/vgXqMV4xtnNP4jSws/MdkAaZIsBf+824mwBakmTlj2TJjnjBu82iwQDCcJ+YeM/Zvzx7Q4bfv7+s5tv/qiwkeeXJqAFASTAKiWIVQ524gFSVI+CUTAKRsFIAgBTHUD8m906owAAAABJRU5ErkJggg==","orcid":"","institution":"Ss Cyril and Methodius University in Skopje: Saints Cyril and Methodius University in Skopje","correspondingAuthor":true,"prefix":"","firstName":"Viktor","middleName":"","lastName":"Stojkoski","suffix":""},{"id":613227953,"identity":"424419ec-90a0-4574-aee0-8848f0b4c5d4","order_by":1,"name":"Sonja Mitikj","email":"","orcid":"","institution":"Ss Cyril and Methodius University in Skopje: Saints Cyril and Methodius University in Skopje","correspondingAuthor":false,"prefix":"","firstName":"Sonja","middleName":"","lastName":"Mitikj","suffix":""}],"badges":[],"createdAt":"2026-03-24 23:27:45","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-9216477/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-9216477/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":105904364,"identity":"6c7caed9-7dbf-440a-9a32-34819e1d6ae4","added_by":"auto","created_at":"2026-04-01 10:07:42","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":1171804,"visible":true,"origin":"","legend":"","description":"","filename":"DigitalProductFiscal5.pdf","url":"https://assets-eu.researchsquare.com/files/rs-9216477/v1_covered_bbb660e9-fff5-434d-b805-ae46a4f924b4.pdf"}],"financialInterests":"","formattedTitle":"The impact of fiscal rule changes on digital products trade","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"review-of-world-economics","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"rowe","sideBox":"Learn more about [Review of World Economics](http://link.springer.com/journal/10290)","snPcode":"10290","submissionUrl":"https://www.editorialmanager.com/rowe/default2.aspx","title":"Review of World Economics","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"em","reportingPortfolio":"Springer Hybrid","inReviewEnabled":true,"inReviewRevisionsEnabled":false},"keywords":"Digital products, international trade, digital services tax, WTO moratorium,","lastPublishedDoi":"10.21203/rs.3.rs-9216477/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-9216477/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eDigital product trade, including digitally delivered goods, productized digital outputs, and platform intermediation fees, has expanded rapidly over the past decade. 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